If you live in rural America, here’s how to save money by switching to an electric car

Rural areas cover more than 70 percent of our country and are home to about 46 million people. If you live in a rural area, you will likely have limited or no access to public transportation, such as buses, shuttles, or ride-sharing. Public transportation in rural areas is limited by frequency of service, cost, long travel distances, and insufficient funding to address these limitations.

Therefore, rural people are more likely to rely solely on a private car to get to work, school, medical appointments, shopping and other important destinations, so choosing the right car or truck to drive is especially critical for rural families. All the factors that every driver needs to consider before buying a new car—such as affordability, reliability, performance, and refueling convenience—are especially important if you rely on your car more than a city or suburban dweller.

At the Union of Concerned Scientists, we’ve been looking at the benefits rural drivers can have from switching from a petrol car to an electric one. A previous blog of mine took a first look at some of these benefits. We are also examining the barriers preventing drivers from making this switch and looking for ways to address these challenges. In a recent survey, respondents in the United States who said they definitely do not plan to buy or rent an electric car were asked which of the series of attributes prevent them from doing so. The top three barriers were charging fees for logistics (61% of respondents); range (55%); and costs involved in purchasing, owning and maintaining electric vehicles (52%).

Not having an accessible outlet to charge an electric car at home is one such challenge that drivers face when considering switching to an electric car. In rural areas, there are more people living in dwellings with a garage or driveway with an outlet, so more drivers can charge at home with little or no cost or logistics required. Public charging can be difficult anywhere, but more so in rural areas where usage rates are low compared to other areas. Some states address public charging in rural areas under the National Electric Vehicle Charging Infrastructure Program, a program of the bipartisan Infrastructure Act that provides funding for public charging infrastructure. Another good news is how the Inflation Reduction Act (IRA) is expanding the federal tax credit to charge fees for equipment installation. It also performs credit reviews for requiring infrastructure installation in low-income communities or non-urban areas.

Another common concern for rural residents is the availability of electric vehicles. Range today is less of an issue, with improvements in lithium-ion batteries and many passenger electric vehicles capable of operating 200 to 300 miles on a single charge, but just over half of respondents to the above survey still claim it’s a major concern.

Transportation costs in the United States are the second largest household spending after housing, and transportation and housing costs combined make up nearly half of the average American household budget. Rural households spend a larger share of their total purchases on vehicles, fuel, insurance, maintenance, repairs and finance charges.

Today I want to take a closer look at one of the most important benefits of switching to an EV: fuel savings and maintenance. I will compare the initial cost of switching to a new electric vehicle compared to the long-term savings for rural drivers when switching from gasoline to electric.

The price difference shrinks

Currently, the list price (or sticker price or manufacturer’s suggested retail price) for a new electric vehicle is higher than for any gasoline-powered vehicle. Estimating the average difference is quite complex, as many factors are involved in the calculation. Car prices fluctuate based on demand and car dealer stocks. Many automakers developed luxury models before expanding to lower-cost models, and averages often include luxury models, so these average differences can be much higher than the actual difference between a given electric car and a similar gasoline-powered car. The key factor in the final price is whether or not the various federal tax credits and consumer incentives available in many states can be applied.

The IRA has changed the requirements for new electric vehicles to qualify for the tax credit. My colleague Dave Richmouth summarizes this on his blog about what an IRA means for electric vehicles. The new electric vehicle tax credit is still up to $7,500, and there is now, for the first time, a $4,000 tax credit for used electric vehicles. A list of electric vehicles that may meet final assembly requirements has been published, but additional information will continue to be released.

No matter how it is calculated, what really matters is that the difference between the starting price of an electric car and a gasoline car is decreasing rapidly (first chart below). This downward trend in the cost of electric vehicles is mainly due to lower battery costs. According to a study by the International Council on Clean Transport (ICCT), assuming battery pack costs fall to $104/kWh in 2025 and $72/kWh in 2030, it is likely that upfront price parity will occur in 2024-2025 for passenger vehicles with Shorter ranges and in 2026-2028 for those with longer ranges (second chart below).

The difference between the price, before incentives, of a gasoline-powered passenger car and an equivalent electric vehicle drops sharply in the coming years. For an electric vehicle with a 250-mile range, this difference is expected to drop from about $15,000 in 2018 to about $2,000 in 2025. The difference between crossovers and SUVs is expected to be slightly larger, at around $3,000 and $4,000, respectively.
The initial cost break for an electric vehicle comes in 2 to 6 years. For an electric vehicle with a range of 250 miles, passenger car price parity should happen within four to five years from today, while for crossovers and SUVs, this should happen a year or two later, according to research by ICCT.

In terms of availability, the electric vehicle market is expanding very rapidly, with many automakers announcing plans to electrify large shares of their fleets. Rural residents who need larger vehicles may be interested to know that up to 100 EV models are planned for 2024, including SUVs and vans. The electric version of the very popular Ford F-150 is already at some dealers.

Will rural drivers save fuel and maintenance? yes!

Initial outlays are still a barrier for many families, but the cost of electric vehicles continues to fall, plus studies show that the money you save when switching to EV offsets the higher initial cost of an electric car or truck no matter where you are. buy your gasoline and where will you ship, And savings are higher in rural areas. (over hereAnd the over hereAnd the over here).

why is that? Because the savings from switching from a gas car to an electric car depends on several factors, including the price of gasoline and the cost of electricity, but also on two other very important factors.

The first factor relates to the vehicle itself. Electric vehicles have more efficient engines than gasoline-powered vehicles. This difference is particularly evident in rural areas, where vehicles tend to be larger and older. In Vermont, for example, the average car in a rural area is three years larger and 2 miles per gallon less efficient than it is in an urban area. In Virginia, 51% of vehicles in rural areas are older than 10 years, compared to 43% in urban and suburban areas. The more advanced the vehicle you are upgrading, the greater the potential fuel savings.

Think of a car that travels 25 miles when it burns one gallon of gasoline. A typical EV producing 3.15 kWh will cover 106 miles of equivalent energy in one gallon of gas (which is 33.7 kWh, if you want that level of detail). In simple terms, electric vehicles are at least 4 times as efficient as gasoline-powered vehicles. For larger, older, less efficient cars, this difference in efficiency is greater.

The second factor affecting the total cost of switching to an EV has to do with driving trends. People drive longer distances in rural areas, so the savings per mile add up. Annually, people across the country drive an average of 13,500 miles in one year. In contrast, for example, the average annual mileage for a rural household in Maryland is more than 25,000, nearly twice the national average.

Let’s say you pay $3,485 for a gallon of gas, and $0.147 for a kilowatt-hour, an example consistent with living in Maryland. And let’s say you’re considering switching from a typical 25 mpg gasoline car to a typical 3.15 mpg electric vehicle, as in the example above. This means that you currently pay 14 cents per mile when you drive your gasoline car and you pay 5 cents per mile to drive an electric car. In other words, you can save about three times Drive an electric car for any number of miles. And a full-size EV pickup truck has the potential to save about 50% in fuel and maintenance compared to a mid-size vehicle.

Adds fuel and maintenance savings to electric vehicles for rural drivers

But let’s continue. If you now think about your annual fuel savings, assuming you drive 25,000 miles a year, you’d spend $3,485 on your gasoline ($0.14/mile x 25,000 miles) and you’d spend $1,163 on your new electric car ($0.05/mile x 25,000 miles) ). This adds up to a fuel savings of about $2,322 in one year. Of course these numbers change with the price of gasoline and electricity, and with the distance you cover.

According to a study, in Vermont over the life of the average car, fuel and maintenance savings add nearly $27,000 for rural households versus less than $22,000 for urban households.

If gasoline prices continue to rise, savings could be even greater (these estimates from Vermont assumed the EIA’s forecast for gasoline prices, which projected lower prices than the high prices we have today). In West Virginia, assuming a driver logs 14,000 miles per year (about 38 miles per day), annual fuel savings have jumped from less than $1,000 in 2019 to $1,800 more recently due to higher gasoline prices. Protection against gas price volatility is another advantage in most locations in the US As we have seen from recent global events, this is no small consideration. In terms of electricity price volatility, Texas last year saw huge hikes in the price of their energy bills, but Texas has an insulated power grid and is unique when it comes to regulating energy markets. My colleague, Mark Specht, addressed this in a blog post.

Over time, fuel and maintenance savings make up for the initial price difference between a gas-powered vehicle and a similar electric vehicle, even before consumer incentives are taken into account. The difference presented present can easily be offset by long-term savings, and this difference will only decrease with each passing year.

So if you live in a rural area and are thinking of buying a new or used car, check out some electric options before you make your decision..

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