Colorado lawmakers are debating a proposal to eliminate tax credits that encourage consumers to buy cleaner, energy-efficient electric vehicles (EVs) and other alternative fuel vehicles. Opponents of the program, notably the Independence Institute and Americans for Prosperity, are feeding legislators incorrect information about how much most consumers can benefit from the program. Despite the opponents’ claims, EVs are not toys for the rich. More than three-quarters of EVs sold in Colorado have a net price to the consumer (after the tax credits) that’s actually well below the average price of a new vehicle, and there is a very affordable used EV market. What’s more, the fuel costs for EVs is about a third of what average consumers spend per gallon on gasoline, making electric cars even more beneficial for working- and middle-class buyers.
In fact, even consumers who don’t buy EVs benefit from increased sales of such vehicles because EVs help reduce air pollution and global warming. The point of the tax credits is to capture those larger, community benefits.
But let’s focus first on the cost of buying an EV compared to purchasing a traditional, gasoline-powered car. The well-respected Kelly Blue Book estimates that the average new car cost $33,666. But EV prices were, for the most part, well below that benchmark.
During 2014 and 2015 (the years for which figures are publicly available from Polk Automotive/IHS) the most popular EVs sold in Colorado were:
- Nissan Leafs; representing 36 percent of EV sales in Colorado; price after tax credits: $18,180 or about half the average cost of a gas-powered car.
- Chevy (General Motors) Volts; 20 percent of Colorado EV sales; cost after tax credits $20,820. That's still well under the average gas-powered car price. (Chevy plans to roll out another EV, called the Bolt, but that model isn’t yet available on the Colorado market.)
- Ford C-Max and Fusion: 15 percent of sales; cost after tax credits: $17,620 or slightly over half the price of a regular gas-fueled car.
- Tesla, various models; representing 23 percent of sales; price after tax credits: $67,500 and up. Note that many Tesla models are the EV equivalent of buying a high-end, gas-powered car, so Tesla more properly should be compared to the prices for, say, Lexus or Cadillac, and even so, Tesla remains price-competitive. But just like most of us may not buy a Lexus, and instead turn to Nissan, Ford or Chevy, most EV buyers also seek out moderately priced makers and models.
In fact, there’s now a market in used EVs, and “previously owned” EVs with under 20,000 miles can sell for less than $10,000. The availability of tax credits for new vehicles helps to reduce the price of those used vehicles, making EVs available to lower income residents who are not in the new car market.
Note, too, that consumers can take advantage of other discounts for EVs. For example, Xcel Energy and Nissan have teamed up to market a $10,000 discount on Leafs, which would bring the net cost to around $10,000. And Nissan offers to lease Leafs at $139 per month (for credit-qualifying customers, the same requirement as for gas-powered car leases). In April, four Colorado EV dealerships also plan to offer their own discounts for electric cars.
While Nissan wants to sell more Leafs, Xcel’s motive is partly to reduce overall air pollution, a statewide goal that in the past has required Xcel to install expensive equipment on its power plants. I’ll talk more about why more EVs on the road will help the state overall in a moment.
And then there’s the benefit of not having to pay for gas: EV owners wind up paying about a third the price for energy to power their cars than do consumers who bought gas-fueled vehicles.
Here’s the math. In Colorado, the price of electricity is about 12 cents per kilowatt hour. An EV needs only .3 of a kilowatt to travel one mile. That means the cost of running an EV is about 3.6 cents per mile. (The math is .3kw x 12 cents = 3.6 cents per mile.)
Now pity the drivers of gas-fueled cars. Gasoline costs about $2.18 per gallon in Colorado. The average gas-fueled car got about 25 miles per gallon in 2016, although some newer cars will get closer to 30 mpg. So, even the more efficient gas-power vehicles still cost about twice as much to run as an EV does. Clearly, from a fuel cost standpoint, EVs win.
So, the numbers – the real figures, not some alternative facts – show that middle-class consumers can afford to buy new EVs and that lower income customers may consider a used EV at the very low prices being offered by Colorado car dealers.
But Colorado’s motive for supporting EV sales is not just benefits to consumers, it is to clear the air. In recent decades, Colorado has made great progress in improving quality, despite having added about 9,000 residents per month in recent years. So we have more people using more vehicles and needing more electricity in 2017 than we did in 2002. And yet, our air is better overall, largely because the U.S. Environmental Protection Agency, state legislature, Public Utility Commission, Air Quality Control Commission, several governors and mayors in the metro area focused on cleaner vehicles and power plants, energy efficiency and more renewable energy. The EV tax credits are just another example of those wise and beneficial policies. EVs in the metro area emit 99 percent less volatile organic compounds and 70 percent less nitrogen oxides than a comparable gas car.
One of America’s most beloved car experts, Ray Magliozzi, the surviving brother of the “Car Guys,” explained EV’s environmental benefits in a recent column:
“It's cleaner and more efficient to produce power at a central location (a power plant) than it is to produce power in everybody's individual cars.
“It's also easier to clean up, maintain and monitor one smokestack (the power plant's) than it is to do those things for a million smokestacks (all of our tailpipes). And even if you're charging your car from the dirtiest power plant, running on 100 percent coal, electric-car expert (and, to be fair, advocate) Jim Motavalli says you'd still reduce climate emissions by 30 to 40 percent over individual gasoline-powered cars.”
And EV owners should remember, the Car Guy added, “you're paying a third of the price per mile for electricity that your buddies are paying for gas.”