While there are plenty of benefits to alternative-fuel vehicles, there are also a few downsides, which have a negative effect on consumer demand. One of the biggest concerns that people have is the purchase price. The most popular electric cars start at $30,000, which is too expensive for most drivers. However, there are a lot of long-term savings that can help lower the sticker price. In the table below we will compare popular green car models, and explore their associated savings.
Batteries Are the Main Reason For the High Cost of Electric Cars
It’s quite clear that in order for the gap between green cars and conventional cars to get smaller, they need to become much more affordable. For this to happen, car makers and battery manufacturers have to reduce the cost of batteries. At the moment, the average electric car battery costs between $12,000 and $15,000 to build, making it the most significant factor in the high purchase price.
Incentives and Rebates Can Help Drive Demand
In efforts to encourage consumers to buy more electric and hybrid cars, the U.S. government offers various incentives that help reduce the associated costs of ownership. These include tax credits, rebates, and access to high occupancy vehicle lanes. The federal government awards tax credits of up to $7,500 for a new plug-in electric vehicle. Various states across the country provide additional incentives, such as purchase rebate, income tax credit, lower licensing fees, or sales tax exemption.
Currently, there are over a dozen all-electric and plug-in hybrid vehicles on the market. The Nissan Leaf, the Chevrolet Volt, the Tesla Model S, the Toyota Prius Plug-in Hybrid, and the Honda Civic Hybrid, are some of the most popular and best-selling green cars. The table below summarizes the costs and benefit of the most popular green models:
Federal Tax Credit
Free access to HOV lanes
With these prices, it’s no wonder that consumers are hesitant to buy. However, most people fail to take into account the amount of money they can save in the long term. In addition to these rebates, green car ownsers will save big on fuel. On average, car owners spend at least $1,000 a year on gas. Since electricity is at least 3 times cheaper than gasoline, and hybrids and electric cars are extremely fuel-efficient, buying a green car makes a lot of finacial sense.