There are definitely benefits to buying an EV nowadays, but you might want to wait.
There’s no question about it: electric vehicles are hot right now. Electric vehicle (EV) registrations were up by 60% during the first three months of 2022, even as overall car registrations were down by 18%.
If you’re one of the many people interested in buying an EV, however, we’ve got bad news for you. The past few years have created a multi-layered car-buying challenge.
It’s a new technology to begin with; add a dose of political back-and-forths and a good dash of the pandemic, and you’ve got a recipe for the wildest car-buying market that automotive experts like Ivan Drury, Director of Insights for Edmunds, have seen before.
“There’s no chance of going to the dealer and seeing those big signs that say ‘blowout sale, multi-year sell down [anymore],'” says Drury. “I dare someone to show me a picture of a dealer who’s got the hot dogs and the fanfare outside. It just doesn’t exist and it won’t for at least a year, if not longer.”
That said, it is still possible to buy an EV nowadays. Or, you might prefer to wait. We’ll help you decide by breaking down the different factors to consider in this pro/con-style list. Buckle up.
✔ Pro #1: Lower Your Carbon Footprint
There’s no question that fossil fuels are drastically impacting our environment, and not in a good way. Reducing your impact on the environment is a primary concern for about 26% of new car buyers when considering a new vehicle, according to a February 2022 survey from Consumer Reports.
The data here are clear: even after you account for electrical charging from coal-burning power plants, and even after you add in emissions from manufacturing car batteries, EVs generate far fewer greenhouse gases. It’s for that reason that some governments are actually phasing out “regular” cars. Sale of gas-powered cars will be outlawed in California, for example, starting in 2035.
✔ Pro #2: Cheaper Over the Long Term
Thirty-one percent of new car buyers would consider an EV because they think it’s cheaper to own over the long run. And indeed, that is true. According to one February 2022 analysis, when you factor in all costs together EVs will set you back between 5% and 17% less over their lifespan, depending on the type of model you choose, compared with similar cars running on internal combustion engines.
This is because they have fewer moving parts, and according to a Consumer Reports study, it’ll cost you 60% less to power an EV over the same distance compared with a gas-powered car. (Bonus: if you have your own solar panels, it’ll essentially be free to power your car.) As gas prices go up, the savings will only increase.
✔ Pro #3: Special Financing Often Available
Many banks and credit unions offer lower rates if you’re buying an EV compared with a gasoline-powered car. There are even entire banks and credit unions devoted to these green car loans.
✔ Pro #4: Help Create Demand for a Sustainable Future
You’ll certainly be doing your individual part to help the environment by purchasing an EV. But by buying one, you’ll also quite literally be adding your name to the list of people who support this technology.
Car makers won’t develop green technology like this unless people buy it, and by voting with your dollars, you’ll help ensure a new market for EVs that’s more than just a passing fad like Blu-ray discs and Walkmans.
✘ Con #1: Long Wait Times
If you’re familiar with how buying a new car normally works, prepare yourself. You can’t just go down to the dealership anymore. Their lots are virtually empty, and that’s because people are buying new cars, especially EVs, even before they can make it to the lot. That can put a big stop sign up for your plans if you need to buy a car today and can’t afford to wait.
Drury describes what he’s seen after a new EV model debuts in pandemic-era online auto shows. “The moment the tarp comes off people were putting money down right then and there, sight unseen essentially, no test drive, saying, ‘hey, here’s $500. Here’s $100. Put my name on one.”
Wait times for new EVs vary by model, but you can expect to be twiddling your thumbs for three months to a year or more. Some EVs, such as the Ford Lightning F-150, have a wait list so long that it stretches into 2025 and they’ve closed it entirely for new buyers.
Don’t count on being able to jump the line by shopping far away, either. According to Drury, dealerships with less demand are simply placing fewer orders to begin with, and quite often they’re placing weird limits on out-of-state buyers.
For example, they might require you to submit a trade-in in order to buy, or to take their (probably sub-par) financing. Or, they might simply not allow you to buy an EV at all because dealerships don’t make as much money from selling an EV as servicing it. “I tell people going across state lines, complicating your life to get that car — you don’t want to do that, typically.”
✘ Con #2: Difficult to Test Drive
In the Before Times, when you wanted to shop for a car, you’d go to the dealership and take it for a test drive — and that’s especially salient with an EV. “Of course you want to test drive it. This is new technology. You’re putting down a lot of money for a lengthy loan period,” says Drury.
But again, you’ll be thwarted by a lack of inventory at the dealerships. And when one does come in, it’s almost always a pre-order from someone else on the list. Since someone else owns it you can’t take it for a test drive, nor even pop open the door to see if you fit inside it.
So, what to do? “I think that your only straightforward solution then is to find someone who’s renting it on a peer-to-peer platform,” says Drury. Apps like Turo or even Craigslist might offer possibilities to find an EV owner willing to rent it to you for a test drive. “I’ve seen some people say, ‘you know, I essentially rent out my EV as a test vehicle for people who want to own one.”
It’ll cost you a pretty penny, yes, but it does let you test-drive the new EV technology and see how it fits in your life (and your parking space), which is something you can’t really do with a traditional test drive.
✘ Con #3: Leasing Might Be Tougher
“[Leasing] an EV might not be the best idea right now. There are few, if any, lease specials, which has pushed the monthly payments up,” says Drury. Although leased EVs made up about 50% of the EV market in the past, that number has gone down to below 20% today.
In addition to higher costs, it’s also trickier to navigate the beginning and end of an EV lease. Your lease contract’s end date is guaranteed, after all — but the arrival of a replacement EV is not. In addition, some automakers are striking the EV lease buyout clause out of new contracts, so you might not even be able to purchase the car in some cases, such as with the Ford Mustang Mach-E.
✘ Con #4: More Expensive Up-Front
Although EVs are cheaper to run over the life of the car, the higher cost is understandably a barrier to a lot of people. A 2022 Ford Escape starts from $27,185, after all, but the same car in plug-in hybrid form will set you back at least $30,185. For this reason, EVs are still considered a bit of a rich man’s game, although there are ways to bring down the cost — but these have drawbacks as well.
✘ Con #5: Tax Credits Are Confusing
Most Americans have heard about the EV tax incentives that make buying an electric car more affordable. Tax credits were only available for each model until it reached 200,000 in sales, for example, meaning that popular cars like the Tesla Model 3 were no longer eligible. However, when President Biden signed the Inflation Reduction Act into law in August 2022 it immediately threw an even bigger eggbeater into the mix.
Here’s a good summary, and here are some of the highlights:
- The tax credit amount ranges from $2,500 to $7,500 for buying a new or used EV.
- The old manufacturing caps will be removed next year, allowing Tesla and other popular EVs to qualify for tax credits again in 2023.
- Starting next year, tax credits will only be available for people earning under $150,000 – $300,000 (depending on how you file your taxes), and only on new EV purchases under $80,000 (SUVs, trucks, and vans) or $55,000 (sedans, hatchbacks, and other cars).
- You’ll need to wait until you file your taxes to get the credit. But starting in 2024, you’ll be able to get it directly as a discount at the dealership.
- Only vehicles that completed their final assembly in North America are eligible.
These rules aren’t always so straightforward. For example, some of the Volkswagen ID.4s are manufactured in Germany and wouldn’t qualify for the tax credit, whereas others are manufactured in Tennessee and would qualify. And unfortunately, you can’t specify which you want — you’ll just need to cross your fingers that you get a Tennessee-made car in that case.
✘ Con #6: Specialized Mechanic Needed
You won’t be able to take your EV to the neighborhood mechanic — at least not yet. Since electric vehicles are so new many of them are still covered by a warranty and being serviced by the dealership, although independent EV repair shops do exist.
In addition, although maintenance costs are relatively low from many common EV automakers like Audi, Kia, and Chevy, repair costs can be high. For example, you won’t need to worry about oil changes since there is no oil, but you will need to worry about replacing your EV battery every eight to 10 years, at a present cost of $5,000 to $10,000 a pop.
✘ Con #7: Financing Can Be Unpredictable
Sure, financing a car might fit into your plans if you were to take out a loan today. But remember, you won’t be taking out that loan until the car actually gets here, which might not be for a year or more.
There’s a lot of room for things to change in that time. Your credit score could go down or up, and interest rates will also change. That adds a lot of uncertainty into the mix. But remember, you can refinance your car loan when market conditions and your credit score are more favorable.
✘ Con #8: Need to Learn a New Technology
Switching to an EV isn’t quite as big of a jump as going from a horse-and-buggy to a Model T, but it’s a big shift nonetheless. According to the Consumer Reports survey, 61% of people would pass on buying an EV because they’re not sure how charging works, and 55% would exclude EVs because of range anxiety.
Those are valid concerns. There are 150,000 gas stations in the US, after all, compared to 48,000 public charging stations — and only 6,000 of those are fast-charging stations. You can expect a quick-ish ramp-up in the number of charging stations, however, due to $3 billion being earmarked for this purpose in the Inflation Reduction Act.
Unless you’re driving in the EV hinterlands (and they do exist), you shouldn’t have to worry too much about finding a charging station. Electric vehicles even include this capability right in the dashboard, although there are also many handy apps dedicated to finding charging stations and planning road trips.
You can also plug most EVs directly into a standard 120-volt outlet in a pinch, although it’ll be much faster with a dedicated EV charging station. The Hyundai Ioniq, for example, can go from 10% to 80% charge in as little as 18 minutes with the right fast charger, versus 43 hours to go from 0% to 100% from a regular wall outlet.
✘ Con #9: Need to Put Down a Deposit (Or Several)
When people choose to buy an EV, they generally commit to it more than with regular cars. “We see the data, it’s very clear,” says Drury. “If you’re dead set on this powertrain type, the brand doesn’t matter. People will cross body styles, they just want some things powered by electricity, pure electricity.”
This is why a lot of would-be EV buyers are opting to place a deposit on multiple EV models, with the first one in being the winner. Putting down a deposit doesn’t commit you to buying that car, after all. It just reserves your spot in line, with the option to purchase when the time comes.
It’s a good strategy for those who aren’t picky, but in order for this to work, Drury recommends two important things. First, make sure the deposit is refundable, and second, get it all in writing.
Should I Buy an EV Now or Wait?
It’s pretty clear that there are more downsides to buying an EV right now than upsides. However, the upsides that do exist can be extra-compelling to a lot of people. Among folks interested in buying a car, it’s about evenly split: 35% would consider an EV in the future, but not right now. But 36% of people would “definitely” or “seriously consider” buying an EV today, even despite all the challenges.
And although things might get easier going forward, don’t bet that everything will 100% go back to the way it was. “I think the method of purchase definitely has changed,” says Drury. “There’s been a paradigm shift because of the pandemic. When it comes to buying a car now, it’s definitely made life a little bit more of a hassle.”
About The Author
Lindsay VanSomeren is a personal finance expert who has written for many websites such as Credit Karma, LendingTree, The Balance, and Experian. She currently lives in Kirkland, Washington with her husband, two cats, and a dog. In her spare time she enjoys homebrewing, reading, and outdoor adventures.