Congress has passed a sweeping tax and spending cut bill that officially ends federal tax credits for electric vehicles (EVs), effective after September 30. Until then, buyers can still claim the $7,500 credit for new EVs and up to $4,000 for used ones.
These federal incentives were initially implemented to make EVs more accessible by reducing the significant price gap between electric and gas-powered vehicles. With their removal, the affordability of EVs for many Americans, particularly those in lower- and middle-income brackets, will be negatively affected.
EVs Cost More Upfront but Save Money Through Fuel and Maintenance Over Time
According to Kelley Blue Book, new EVs cost around $9,000 more than comparable gas vehicles, and used EVs cost about $2,000 more. The federal credits, often supplemented by state-level incentives, helped narrow this affordability gap. Without these financial supports, EVs may become out of reach for many consumers.
Ingrid Malmgren of Plug In America expressed concern that the loss of tax credits undermines efforts to ease the cost burden of transportation for those who could benefit most from lower operating expenses.
Congress Ends EV Tax Credits This Fall Sparking Affordability Fears Despite Long Term Savings and Emissions GainsDespite higher upfront costs, EVs remain financially viable over time due to lower fuel and maintenance expenses. Malmgren emphasized that buyers willing to consider long-term costs will find EVs a smart investment. Electric cars generally require less maintenance because they have fewer moving parts, and charging is often cheaper than filling a gas tank. These factors mean that, even without tax credits, EVs can still offer significant lifetime savings depending on usage and local energy prices.
EVs Offer Major Fuel Savings and Emissions Cuts, Even in Coal-Heavy States
A 2020 study in the journal Joule found that EV owners in the U.S. save an average of $7,700 in fuel over 15 years. In states with lower electricity costs, such as Washington, savings can exceed $14,000 under optimal charging conditions. Even in less favorable conditions, EVs consistently show lower fuel expenses. The study did not include purchase price or maintenance costs, yet the fuel savings alone indicate that EVs can be economically sensible in every state.
Although manufacturing an EV is initially more polluting than making a gas car, the environmental scales tip in favor of EVs over time. After about 15,000 miles, the total emissions of gas and electric vehicles are roughly equal, but EVs continue to pollute less with every mile driven thereafter. According to the U.S. Department of Energy, lifetime emissions for an average EV are about 50% lower than those for a gasoline car, reinforcing the long-term environmental advantage of electric mobility.
Studies also show that EVs are cleaner even in regions heavily dependent on coal for electricity. A Yale Climate Connections analysis found that EVs in West Virginia, one of the most coal-powered states, emit 31% less carbon dioxide than gas cars. Peter Slowik of the International Council on Clean Transportation highlighted EVs’ superior efficiency, noting that vehicles like the Tesla Model Y and Model 3 can travel over 100 miles on energy equivalent to a gallon of gasoline, making them four to five times more efficient than traditional cars.
