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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. is $0.12/kWh (about the same in Minnesota too) 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 could usually get electricity for half off during the night time. Now you 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 $2.50 per gallon, then your monthly gas costs are $100. 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 $250. That is twelve times more than an average EV that is charged with off-peak rate. :)
You can expect to also see savings on the maintenance side. Since EVs, especially battery electric vehicles, have less wearing parts they also clearly 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 will be running 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 of course increases the overall efficiency, but it also drastically reduces the traditional brake wear since electric motors do the heavy lifting.
How about the 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 would see the same time 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 traction 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. Batteries have developed a lot since 2011. Their price has dropped to just a quarter of what it used to be in 2011. We have only seen some more advanced degradation in the first generation Nissan Leaf batteries that had the first generation battery chemistry and didn't have any active thermal management system. Other EV batteries seem to be lasting at least 12-15 years in normal use. Batteries lose their capacity slowly over time and if the battery has 70% of the capacity left after 12 years of service it might be time to upgrade to a new battery. Presently new EV batteries cost between $6,000 and $12,000, but the good news is that since the battery technology keeps advancing fast we can expect that the battery costs in 12 years will be much lower than what they are right now or 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.
Would you like to learn more?
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 good information so check it out.
Federal tax credit for EVs
There is a federal tax credit for plug-in vehicles. The amount is based on the size of the battery, the maximum being $7,500. This credit begins to phase out for a manufacturer’s vehicles when the manufacturer has sold 200,000 EVs in the U.S. Tesla and Chevrolet reached that threshold last year so Tesla and Chevrolet buyers don't get it anymore. These credit amounts are on the EV Info List and you can find more information by visiting the IRS website.
Federal tax credit for EV charging station installations
There is a federal tax credit for the cost of installing EV charging equipment. If you install EV charging equipment between January 1, 2017, and December 31, 2021, you are eligible to claim 30% of costs up to $1,000. IRS Website.
MnPASS Electric Vehicle Incentive—Three Year Pilot Program
People who purchase or lease a new or used battery electric or plug-in hybrid vehicle between November 1, 2019, and October 31, 2022, 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.
Utility companies want to support transportation electrification and see you charging during off-peak hours.
Electric utilities have for years seen the 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 their 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 are offering special EV rates that incentivize owners to charge their cars during the night when the grid has a lot of extra capacity available. We provide some examples here, but check with your local utility company for their present programs.
Utility EV rate examples:
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.
Rates that are presently 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 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 $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-Day Whole House: All energy in your home will be billed based on the TOD Rate.
Time-Of-Day EV Only: Only the energy used by an EV will be billed based on the TOD rate.
Storage Program: Off-Peak Charging only.
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.
Unfortunately, manufacturers don't provide all EV models to Minnesota and even for the models that are available on paper, Minnesota dealers might get very few units. This is why it is important to check out which dealers (if any) have the models available that you are interested in. Here is some information on how to best find new and used EVs on the Minnesota market.
Tips on buying new EVs:
Start by looking at what makes and models are available in Minnesota right now. EV Info List provides pricing and technical specs information and the table on left shows how many units were at dealer lots recently.
You can find more detailed and up-to-date vehicle availability information by going to Cars.com and searching EVs near you. Cars.com seems to show the vehicles available at the major dealers well.
You should also look at our EV Sales Savvy page where we list EV salespeople that are recommended by Minnesota EV Owners. Who you work with makes a big difference.
If you are interested in Teslas, the best course of action is to visit their store in Eden Prairie or their new store in Maplewood. They usually stock new and used vehicles the same way as traditional auto dealers, so you might be able to drive one soon.
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 and 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 .
Local dealer rebates and offers (that we know of)
Auto manufacturers and auto dealers adjust their pricing and offer different incentives monthly. Some of these incentives can be combined and some apply only to certain option levels and purchase/leasing choices. This can make the pricing hard to understand.
We will list all meaningful incentives that we are aware of here.
Auto manufacturer and dealer offers and incentives:
Right now there is such strong demand and vehicle availability is very limited so you can expect to pay MSRP for vehicles. (January 2022)
Leasing vs Buying
Traditionally leasing hasn't usually 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. When you lease a car, usually the leasing agreement states the residual value which is what you would pay at the end of the lease if you would choose to purchase the vehicle at the end of the lease. 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 it used to. At the same time, we have to remember that the depreciation risk for the traditional internal combustion engine vehicles is increasing all the time since one day 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 any depreciation risks. You can just drop the keys at the end of the lease and see what new and great vehicle is available on the market at that point.
One case where leasing can also provide special value is when the customer doesn't pay enough taxes to be able to take advantage of the full federal tax credit. In EV leasing, the leasing company can take advantage of the federal tax credit since they are the owner of the vehicle. Leasing companies should always take into account this tax credit amount in leasing calculations and this should directly lower the monthly leasing payments. Not all leasing companies do this, so make sure that you will get the advantage of the tax credit in the leasing deal.
Electrek provides a very useful leasing price list here.