You Want an EV — But Is a Hybrid Better for Your Wallet?
As the world becomes increasingly focused on sustainable and eco-friendly transportation options, electric vehicles (EVs) have emerged as an exciting choice for many environmentally conscious individuals. The promise of zero emissions, reduced dependence on fossil fuels and potential long-term cost savings make EVs an enticing prospect. However, there are also hybrids to consider.
Hybrid vehicles, which combine the use of an internal combustion engine with an electric motor, might be a more budget-friendly option. By weighing the upfront expenses, government incentives, charging infrastructure, maintenance costs and resale values, GOBankingRates compiled a comprehensive analysis to help you make an informed decision about the best choice for your personal finances and sustainability goals.
Upfront Costs: Buying a Car
According to Maham Khan of EVSTOR, the upfront cost is something to consider when deciding between a hybrid and a full EV. Hybrid cars, which combine an internal combustion engine with an electric motor, generally offer a more affordable option compared to fully electric vehicles. On average, hybrids are typically priced lower than EVs.
In contrast, full EVs, which solely rely on electric power, often come with a higher price due to the cost of battery technology. However, as the technology continues to advance and gain wider adoption, the prices of EVs have been gradually decreasing in recent years. This trend is making electric vehicles more accessible and affordable to a broader range of consumers.
Unfortunately, for some customers, the cost savings just aren’t there yet. “As someone who cares a lot about the environment, I wanted an EV,” shares Toyota Prius owner Sarah Meads. “But, at the end of the day, a hybrid just fit into my finances better because it was cheaper at the dealership.”
Maintenance Costs
When it comes to maintenance, there are pros and cons in both directions. Since hybrids still have an internal combustion engine, their maintenance requirements are similar to those of traditional gasoline-powered vehicles. This means that routine maintenance, such as oil changes and engine checks, is still necessary.
“EVs typically have lower maintenance costs compared to hybrids,” shares Rodney Yo, owner of Best Online Traffic School. “This is mainly due to fewer moving parts and the absence of a gasoline engine, which eliminates the need for oil changes, tune-ups and other engine-related maintenance.”
According to the U.S. Department of Energy, electric vehicle batteries are engineered to endure the lifespan of the vehicle. Many manufacturers provide 8-year/100,000-mile warranties for their batteries.
Fueling
When it comes to fueling, hybrids have the advantage of flexibility. They can rely on both gasoline and electricity, depending on the driving conditions and battery charge. This means that if you can’t find a charging station, you can still fuel up at a regular gas station. The downside is that you will still need to buy gasoline, which can be a significant expense over time.
EVs, on the other hand, rely solely on electricity. Charging an EV can be more cost-effective compared to filling up a gas tank, especially if you have access to affordable electricity rates or free charging stations. Patrick Mendoza shares that this is one of the reasons he loves his 2021 Tesla Model 3 Performance. “I installed the at-home charger and only pay about $25 extra per month to have a full ‘tank’ every day.”
Additionally, EV owners may benefit from reduced maintenance costs and lower overall operating costs due to the lower cost per mile driven.
Tax Breaks and Credits
Tax incentives play a vital role in the decision to adopt electric vehicles. While federal tax credits previously applied to both hybrid cars and EVs, the credit for hybrid vehicles has expired. Currently, to qualify for the federal tax credit, vehicles must be either a full EV or a plug-in hybrid.
According to Yo, starting from 2023, both new and used EVs and plug-in hybrid electric vehicles are eligible for federal tax credits in the U.S. The maximum credit available for new vehicles is $7,500, split into two parts with different criteria.
Half of the credit — $3,750 — depends on a specific percentage of critical battery minerals being sourced from the U.S. or countries with a U.S. free-trade agreement. The other half depends on the percentage of battery components manufactured or assembled in those same countries. For used EVs or plug-in hybrids to qualify, they must meet certain requirements and can receive a tax credit of up to $4,000.
Non-Monetary Factors To Consider
While financial considerations are, of course, important, there are other factors to keep in mind when choosing between a hybrid and an EV.
Emissions
One important factor is the environmental impact. EVs produce zero tailpipe emissions, helping to reduce air pollution and combat climate change. Obviously, that’s the gold standard and pretty unbeatable.
Hybrids, although more fuel-efficient than traditional cars, still produce emissions when running on gasoline.
Infrastructure
Another factor to consider is the charging infrastructure. While the charging infrastructure for EVs has been expanding rapidly in recent years, it may still be less developed in some areas compared to others.
If you live in a region with limited access to charging stations, a hybrid car might offer more convenience and peace of mind.
Is a Hybrid Better Than an EV?
When it comes to deciding between a hybrid car and a full electric vehicle, there are several financial considerations to evaluate. Hybrid cars generally have a lower upfront cost and offer more flexibility in terms of fueling. On the other hand, EVs have lower operating costs, benefit from tax credits and contribute to a cleaner environment.
Ultimately, the decision depends on your specific circumstances, driving habits and priorities. Assessing your budget, available charging infrastructure, environmental concerns and tax incentives will help you determine whether a hybrid or a full EV is the better financial choice for you as you make the switch to electric driving.
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