Financial Benefits

Financial Benefits

What's the Cost to Buy?

Base prices range from $21,750 for the Smart Electric Drive to more than $125,000 for a high-performance Tesla Model S. In some cases, that’s thousands more than similarly-sized gas-powered cars. But electric cars (excluding low-speed neighborhood vehicles) are eligible for up to a $7,500 federal tax credit to offset the extra cost. Additional city and state tax credits are available in California that can make the costs of electric cars very compelling, especially for consumers with a home solar system.

The most popular electric and plug-in cars are sticker priced at $26,000 to $32,000 before the tax credit. Leases are available for as little as $170 a month (after you sign the tax credit over to the leasing company).

Plug-in hybrids are sticker priced between $30,000 and $75,000, but they have been advertised with lease deals as low as $170 a month.

What's the Cost to Drive?

We’ve seen pure-electric cars return a little over 3 miles per kilowatt-hour, which gives them a cost to drive of about 3.5 cents per mile (for the Nissan Leaf). For comparison, the 32-mpg Toyota Corolla costs about 12 cents per mile.

Electric cars also require no oil changes and minimal maintenance. Low operating costs should offset the cost of buying in just the first year for a Nissan Leaf, for example.

What Incentives are Available?

There are many federal, state, and local incentives being offered right now that can reduce the cost of buying an electric vehicle. Tax credits and rebates can be combined and are not necessarily baked-in to the purchase price of a vehicle at the dealership, so some additional paperwork is needed.

  • Federal Plug-in Electric Vehicle Tax Credit: The federal tax credit is valued at up to $7,500 and is linked to the capacity of the battery in the vehicle. Battery electric vehicles, for instance, generally qualify for the full $7,500 incentive, whereas plug-in hybrids generally qualify for less.
  • California Clean Vehicle Rebate Program: The state’s rebate program provides $1,500 and $2,500 toward the purchase or lease of a new PEV, depending on the vehicle type. High-income earners (single filers making more than $250,000 and joint filers making more than $500,000) are ineligible for the program. Furthermore, the rebate is increased by $1,500 for households with income less than 300 percent of the federal poverty level.
  • California electric vehicle drivers can save on insurance discounts. Farmers Insurance provides a discount of up to 10 percent on all major insurance coverage for PEV owners, while AAA offers up to a 5 percent discount.

Resource Links

Alternative Fuels Data Center Vehicle Cost Calculator:

UC Davis EV Explorer Annual Commute Cost Calculator: