Economics, Incentives,
Rates and Tips
Save some green!
How much does it cost to drive an EV?
As a rule of thumb, EVs get three miles per kilowatt-hour (100MPGe) so if you drive 1,000 miles/month (12,000 miles/year), you use about 333 kWh of electricity. The average electricity cost in the U.S. (and Minnesota) is $0.12/kWh, so your electricity costs for driving are about $40/month for 1,000 miles/month. If your electric utility provides an EV rate to incentivize people to charge during the off-peak hours, you usually get electricity for half off during the night. Now, driving 1,000 miles/month costs only $20.
If you drive the average internal combustion engine vehicle with 25 mpg, you use about 40 gallons of gas for driving 1,000 miles/month. If we assume that gas costs $3.00 per gallon, then your monthly gas costs are $120. If you drive a thirsty truck getting only 10 mpg, you use 100 gallons of gas in a month, and using the same gas price, your monthly gas costs are $300. That is fifteen times more than an average EV that is charged using the off-peak rate. :)
Maintenance savings
You can also expect to see savings on maintenance. Since EVs, especially battery electric vehicles, have fewer wearing parts, they also have lower maintenance costs. Even plug-in hybrids, which still have an internal combustion engine, have lower maintenance costs than traditional gas cars because the internal combustion engine runs much less. All EVs also have regenerative braking, during which the electric motors turn into generators and store a majority of the deceleration energy back to the battery to be used in the next acceleration. This not only increases overall efficiency, but it also drastically reduces brake wear, since electric motors do the heavy lifting.
How about battery replacement costs?
There has been a lot of discussion about potential battery replacement costs. People know that their cell phone batteries hardly last three to four years, so they are concerned that we will see the same rate of degradation on EV batteries. Fortunately, that is not the case. All manufacturers provide eight years and a minimum of 100,000 miles as a warranty on EV batteries. Present-day EVs have been in the market since 2011, so we are starting to have some data on how the batteries are performing. Battery technology has advanced a lot since then. The price of batteries has dropped to one tenth of what it was in 2011. We have seen some more degradation in the first generation Nissan Leaf batteries. They used early battery chemistry and didn't have an active thermal management system. Based on current data, other EV batteries are likely to last at least 15-20 years in normal use. Batteries lose their capacity slowly over time, and if the battery has 70% of the capacity left after 20 years of service it might be time to upgrade to a new battery. Currently new EV batteries cost between $6,000 and $12,000, but the good news is that the battery technology keeps advancing quickly. We can expect that the battery costs in 20 years will be much lower than what they are right now, or that you would get a much bigger battery for the same price. And what happens to those old batteries? They are still very valuable energy storage units and will get a second life as the stationary storage units for a home or grid. Our estimate is that EV batteries will easily have at least a 30-year life before they need to be recycled. More information about batteries and recycling.
Would you like to learn more?
A Consumer Reports analysis finds that the most popular electric vehicles cost less to own than the best-selling gas-powered vehicles in their class. Their report provides a lot of valuable information, so check it out.
Incentives
Federal tax credits for EVs and charging infrastructure
There are a many federal incentives for new and used EVs and charging infrastructure. The best way to find up-to-date information about different programs is to visit the DOE’s EV tax incentives hub https://afdc.energy.gov/laws/ev-tax-credits
MN Electric Vehicle (EV) Rebate Program
MnPASS incentive
People who purchase or lease a new or used battery electric or plug-in hybrid vehicle between November 1, 2019, and October 31, 2025, can receive a one-time credit in their account to pay toll charges for using MnPASS lanes. This credit is $250 for battery electric vehicles and $125 for plug-in hybrids. Find more information by visiting MnPASS website.
EV Rates
Utility companies want to support transportation electrification and see you charging during off-peak hours.
For years, electric utilities have seen electricity sales decline because everything is becoming more energy efficient. This has put some pressure on many of them to increase their electricity rates. Electric vehicles can change this trend, so your electric utility company is happy to see you dropping oil and starting to drive with locally-produced electricity. EVs can pose challenges to the distribution grid if everyone starts charging right after they come home when the grid has the highest consumption peak. Since EVs can relatively easily shift the charging to off-peak hours, utility companies offer special EV rates that incentivize owners to charge their cars overnight, when the grid has a lot of extra capacity. We provide some examples here, but check with your local utility company for their present programs.
Utility EV rate examples:
Xcel Energy:
Xcel Energy has some existing EV rates and is doing pilot testing with several other rates that we might see more widely available in the future.
Some examples of rates that are currently available for Xcel customers:
Whole House Time of Use (TOU) - Off-peak 9 p.m. to 9 a.m., plus weekends and holidays. Easy setup, since Xcel will just come and change the existing meter. All consumption, including household usage, are in this rate. Does not work with residential solar PV systems.
Separate EV Rate - Same pricing structure and off-peak times as the TOU above, but only for EV charging. More expensive because it requires a separate meter installation parallel to an existing utility meter. Does work with residential solar PV systems.
Connexus Energy
Connexus Energy TOD rates have three tiers: Off-peak 8 p.m. to 8 a.m., Intermediate 8 a.m. to 4 p.m., and On-Peak 4 p.m. to 8 p.m. They also provide a $500 rebate for Level 2 charging station installations and renewable energy for the life of the car with no extra cost through the Revolt program. Visit EV rates and programs page for more information.
Dakota Electric
Dakota Electric Time of Use rates have three tiers: Off-peak 9 p.m. to 8 a.m., Intermediate 8 a.m. to 4 p.m., and On-Peak 4 p.m. to 9 p.m. They also provide a $500 rebate for Level 2 charging station installations and renewable energy for the life of the car with no extra cost through the Revolt program.
Time-Of-Use EV Only: Only the energy used by an EV will be billed based on the TOD rate.
Storage Program: Off-Peak Charging only.
Power your driving with renewable energy.
You can consider installing solar panels on your roof, signing up for a community solar program, or signing up for renewable energy programs provided by your local electric utility company.
Get in touch with your electric utility company
Your electric utility company is happy to help you to figure out your home charging setup. Most have special EV rates that provide cheaper electricity during off-peak hours, and some even provide charging installation incentives. MNCharging.org provides you a direct link to your own electric utility.
Some buying tips:
Tips on buying new EVs:
Start by looking at what makes and models are available in the US right now. EV Info List provides pricing and technical specs information.
Check out auto manufacturers webpages for more information about different models and look at what kind of offers they advertise.
You can find more detailed and up-to-date vehicle availability information at dealers by going to Cars.com and searching EVs near you. Cars.com seems to show the vehicles available at the major dealers.
You should also look at our EV Sales Savvy page where we list EV salespeople that are recommended by Minnesota EV Owners.
If you are interested in Tesla, Rivian or Lucid models, the best course of action is to visit their store websites and find local stores or online ordering instructions. If they have local stores, those usually stock new and used vehicles the same way as traditional auto dealers do.
How to find used EVs:
You can use Cars.com to search for used EVs near you, but keep in mind that this service lists only vehicles at major dealers.
CarSoup seems to have a good number of used EV listings and Craigslist and Facebook Marketplace are usually the best places for finding used EVs that are sold by private parties.
There is also a used car dealership, GS Motors, in Hopkins that specializes in used EV sales. It has been very popular among Minnesota EV Owners.
Another used vehicle dealership that specializes in EVs is Current Automotive. They are located in Chicago, but ship vehicles to Minnesota.
The best site for finding used Teslas is EV-CPO.com. They have a very comprehensive search engine that lists all used (and new) Teslas that Tesla has at their stores.
Other used EV listing sites: FIndMyElectric.com and MyEV.com .
Leasing vs Buying
Traditionally, leasing hasn't been the most economical way to acquire a car, but there are a few reasons why you shouldn't rule it out right away with EVs. Leasing moves the depreciation risk to the leasing company, and since EVs are full of new technology that is advancing fast, the depreciation risk can be higher than with traditional cars. At the same time, we have to remember that the depreciation risk for traditional internal combustion engine vehicles is increasing all the time. This is because in the near future a majority of people will prefer EVs over traditional cars and that will drop the resale values of relatively new internal combustion engine cars. Leasing provides a risk-free opportunity to test new technology for a couple of years without depreciation risks. You can just drop the keys at the end of the lease and see what new and great vehicle options are available on the market at that point.
Leasing also provides an extra benefit on the federal EV tax credit. Due to a loophole in the law, the federal EV tax credit is available for leasing financing institutions for all EV models, even those that don't qualify for the tax credit through purchase. If the leasing company provides that tax credit amount to the customer in their leasing pricing, you will see very appealing leasing deals.
Electrek provides a very useful leasing price list.