The Surge in Financial Accessibility of Electric Vehicles
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Consumers are increasingly interested in the sustainability of the products they purchase. Vehicles are no exception. The average gas vehicle emits five to nine tons of greenhouse gasses per year. The electric vehicle (EV) industry is trying to combat that impact.
The market for EVs is growing exponentially. More than 10 million EVs were sold in 2022, and 14 million are expected to be sold by the end of the 2023 calendar year. That accounts for about 18% of all sold vehicles. This is clearly still not the majority. However, progress is on the horizon — most notably with the increased financial accessibility of EVs.
Rise in Demand, Advancements in Tech
For alternative energy to become affordable, there must be enough demand to keep the industry afloat. Luckily, the trend in sales is indicative of an overall consumer demand for EVs. There are a few factors that are predicted to drive this trend throughout the next decade to 2031, including:
- Environmental concerns;
- Greater choice of EVs;
- Improved battery capacity;
- Financial savings.
The initial price tag of the average EV is more than $10,000 over the price of the typical gas-fueled passenger car. This is understandably off-putting for many consumers looking for an affordable vehicle. There is the justification that you save money over time with electric cars due to lower maintenance and fuel costs. However, there are further incentives that may persuade you to make the initial investment.
While you don’t need a special loan to purchase an EV, there are some unique options. Car dealerships may even tout the loans as electric-vehicle-specific, but there isn’t a technical difference. They’re still loans run through accredited banks and have the same terms as most auto loans. The innovative parts of EV financing come in the form of:
- Additional financing for home charger installation;
- Higher loan limits than traditional vehicle loans;
- Access to a supportive community of EV owners;
- Expertise from direct-to-consumer EV manufacturers;
- Deferred payment options;
- Tax credits and rebates incorporated into the loan package.
While these loans are the same as traditional auto loans on the surface, they acknowledge the differences that early adopters of EVs will have. The government even offers certain incentives to go green with your ride and reduce your carbon footprint.
Government incentives play a pivotal role in driving the adoption of electric vehicles. These incentives vary by region and can significantly reduce the overall cost of purchasing an EV. One notable incentive is the federal tax credit offered to new EV owners. The tax credit, which is available in several countries including the United States, provides a direct reduction in the amount of taxes owed for purchasing an electric vehicle. It can give owners up to $7,500 in rebates, lowering the cost even more in the long run.
This clearly makes EV ownership much more financially appealing. Potential EV buyers should research and understand the incentives available in their respective regions and plan based on what they can afford up front to make an informed decision.
Decreasing Battery Costs
One of the primary cost barriers to electric vehicle adoption has been the high price of batteries. However, the cost of battery production has been steadily decreasing over the years. According to a report from the U.S. Department of Energy, EV battery pack costs have significantly declined, making up a smaller portion of the overall vehicle cost.
In fact, they have dropped by about 90% in cost over a period of 14 years. In 2008, a battery was priced at around $1,355 per kWh. Adjusting for currency inflation, they only cost about $153 per kWh. This reduction in battery costs directly translates to more affordable electric vehicles for consumers, which is crucial in these turbulent economic times.
When considering an EV purchase, buyers are understandably concerned about the availability of charging stations. While they’re still less abundant than gas stations, they are increasing in number across the U.S. As of 2023, there are over 130,000 charging stations across the states, and the government plans to have at least 500,000 by 2030. These are going to be sprinkled throughout communities and major highways, hopefully eradicating the issue of running out of juice and not being able to fill back up. It’s a great plan to reduce rural and urban carbon emissions.
Homeowners can also explore the option of installing a home-based EV charging station. This sounds like a large commitment, but remember that there are loan adjustments to account for this type of installation. EV owners that have a home charging station are most satisfied with their switch away from gas.
When looking to install a home charging station, homeowners have a few options. Level 1 EV chargers typically come with the vehicle and can be plugged directly into a regular outlet. This is the cheaper option, but it takes longer to charge due to its low-volt plugs. EV owners with Level 1 chargers typically also invest in portable or emergency chargers to take with them on the go.
Level 2 chargers have twice the amount of voltage and charge much more quickly. These are the chargers that have installation fees covered in loan agreements. Installing them takes a little more finesse so that your electrical system can handle the output. You’ll have to work with an electrician to ensure safe installation. There are portable and permanent versions depending on a consumer’s needs.
EV chargers can also be cheaper if owners opt to go with base models. However, features like Wi-Fi connectivity can help you keep tabs on energy usage and adjust your charging habits and times. This will help you save money and reduce your impact on the planet at the same time.