THE ELECTRIC CAR APOCALYPSE – BY PETER GECKELER
Georgia ranked fourth in the U.S. in electric vehicle registrations last year —an impressive showing for a state notched squarely in the middle of the country’s “truck belt.”
You may be like me and have noticed the influx of electric cars around Georgia in the past year, such as the Volt, Tesla’s cars and the Leaf. Seriously, they are taking over like a zombie apocalypse. At first I thought everyone in the city was going green and I had just missed the memo, but after doing some research and speaking with multiple friends and family who recently leased an electric vehicle, it became clear as to why they made the switch. For a select few the environmental impact was the driving force, but for most, the financial incentives were the main reason behind the decision. To explain this financial incentive I will use an example of the most common electric car I see around: the Nissan Leaf.
Purchase price for a basic model will start around $29,000 - $30,000, or $200-250 per month if you lease the vehicle. Georgia is offering several tax incentives to get you to purchase or lease an electric vehicle which includes a tax credit for up to 20% of the cost of the vehicle or $5,000, whichever is less. The credit can be carried forward for up to 5 years and cannot exceed the individual’s income tax liability.
According to the Department of Energy, electricity to power electric vehicles is less than one-fourth of the cost of gasoline, and the cost to drive an EV a mile is about 4 cents - or about $2.64 to fully charge an all-electric vehicle with a 70-mile range. Electric vehicle charging stations, though, typically cost $350 to $1,000. While a 120 volt charger typically does not need any rewiring to use, as 240-volt circuit or higher will need a dedicated circuit installed by an electrician.
Diving into the math behind these numbers helps explain why electric cars are popping up everywhere in the state of Georgia. If you divide the max credit of $5,000 by a monthly lease of $200 you can see that for two years you are essentially leasing the car for “free”, not to mention the thousands you can save in gas over those two years. If you’re currently driving 17,500 miles a year and your car gets 18.5 miles to the gallon, you’re using 945 gallons of gas each year. If you multiply that number by the average price of gas ($3.73 x 945) then you’re spending more than $3,500 in gas each year. Now imagine not spending a dime on gas because you have a “free” electric vehicle.
In summary, the benefits to purchasing an electric car like the Leaf include:
• Reducing emissions and improving environment in Georgia.
• Significant annual saving on gas costs.
• Leasing the car for “free” for first 2 years (Based on stated lease rate and tax liability).
• Extra 10 percent tax credit for the electric vehicle charging equipment up to $2,500.
• You get to always ride in the HOV lane. That’s right, even when you are by yourself!
Usually though, if something is too good to be true, it is. There are some important considerations to owning an electric vehicle:
• The battery charge of the 2014 models is only about 75 -90 miles (no long road trips).
• Your electric bill may go up to some degree.
• The tax savings will be dependent on your income tax liability; therefore, your savings may not be worth it if you are in a low earning tax bracket already. Since the state is just offering a percentage off your income, and not a flat $5,000, this deal is most attractive to those who make above $60,000 a year.
• Legislation has already been proposed to reduce or eliminate the tax credit in the coming years.
• You have to drive an electric car . . . a challenge for those of us who are attached to our trucks and SUVs!
After weighing the benefits and costs, an electric vehicle could be a good option for you; however, it doesn’t make sense right now for everyone. We recommend taking a look at your full financial picture to see if opportunities like this make sense for you and your family. Remember, there is no such thing as a pure financial decision. Let us know what your experience has been thus far if you already own an electric vehicle. Give us a call and let’s have a conversation.