If you are considering the purchase of a vehicle for business, should you opt for an electric-powered vehicle (EV) or fuel cell vehicles (FCV), a hybrid (electric and gas), or a gas- or diesel-powered vehicle? Sales of EVs are up, but are still only a small fraction of the vehicle market ( 5.6% of U.S. new-car sales in 2022). It’s not an easy decision to choose the vehicle type, much less the model and accessories. Take the time to do your research and keep the following factors in mind.
Do your research and consider these factors to help you decide:
- Cost. The initial cost of an EV usually is higher than a comparable gas-powered vehicle. Consumer Reports says EVs run about $12,000 more. Of course, tax credits can somewhat close the gap.
- Maintenance. The maintenance costs of EVs usually are lower than those for gas-powered vehicles. Consumer Reports says savings over the life of an EV likely is more than $6,000.
- Fuel savings. It’s not easy to figure whether it costs more or less to charge a vehicle than to fill up a gas tank. The cost of gas varies considerably over time and in different locations, as does the cost of kilowatt-hours across the country. It’s probably fair to say that the cost of charging an EV is likely hundreds of dollars less than gas at the pump.
- Insurance. As a general rule, the cost of insurance is higher for EVs than fossil fuel-powered vehicles.
- Practicality. Depending on where you are located, the scarcity of charging stations may work against EVs. This is especially problematic for those who drive considerable distances on a regular basis.
- Federal tax credits. These are only for EVs and FCVs. They do not apply to hybrids or fossil fuel-powered vehicles.
- State tax incentives. In addition to any federal tax credit that may apply for buying an EV, there may be state tax incentives for buying or, in some cases leasing, EVs in the form of rebates, vehicle license fee reductions, sales tax exemptions, or tax credits. You can find a state-by-state listing at DSIRE and Electrek (the listing at Electrek is easier to use because it’s limited to EVs). The incentives may change going forward so check before you buy.
- Business use and location. Consider the driving distance and area in which your business is located. If the vehicle will need to travel long distances in rural areas where there are currently no or few charging stations, an EV may be impractical.
- Personal preference. Regardless of cost, you may prefer to help with climate change by using an EV.
Final thought
Carroll Shelby, American automotive designer, racing driver, and entrepreneur, said: “I’ve always been asked, ‘What is my favorite car?’ and I’ve always said ‘The next one.’”
As you think about your next one, be sure to factor in not only the cost up front and over the life of the vehicle, but also tax breaks and so much more.
You can read more about purchasing a vehicle for your business in this blog and here.
