How does the EV tax credit work?

The rules regarding the federal EV tax credit recently changed as a result of the U.S. government's newly enacted Inflation Reduction Act. You can review the current guidelines described in this article

Which EVs qualify for the new tax credit?

The Department of Energy has a list of 2022 and 2023 EVs and plug-in hybrids that may be eligible. Note that automakers sometimes allocate two or more plants to build a particular model line. The DOE site has a VIN-lookup tool that allows users to check the country of origin of a specific vehicle.

How to claim the EV tax credit?

Purchasers of qualifying new or used EVs and plug-in hybrids who meet the federal EV tax credit's individual requirements, including income, can claim the credit on their annual income taxes. You'll likely need to file the Qualified Plug-in Electric Drive Motor Vehicle Credit form (aka form 8936). Visit the IRS website for more information and consult a tax professional for advice on your filing.

How much does it cost to charge an electric car?

The price to charge an EV's battery varies much like the cost to fill an internal-combustion vehicle's fuel tank. It depends both on the size of the battery pack (the tank) and the price of electricity (the fuel). In August 2022, the average cost of a kilowatt-hour of electricity for residential consumers was about 16 cents. At that rate, for an EV with a 100-kWh battery and a range of 300 miles, you're looking at an average cost of $16 to fully charge the battery and a cost per mile of just over five cents.

How much does an electric car battery cost?

The cost of an EV battery makes up a large portion of the vehicle's price and varies from manufacturer to manufacturer and model to model. Automakers don't publicize battery replacement cost, but packs can range from a few thousand dollars to around $20,000 for high-capacity units. Reconditioned batteries may be available for considerably less.

How long do electric cars batteries last?

An EV battery should last for most or all of the useful life of the car. That said, like any battery, the pack will degrade over time, reducing the amount of energy it can store and deliver. To allay fears of expensive battery replacement, most manufacturers currently provide generous warranty coverage—usually around eight years or 100,000 miles—for this component.

How does regenerative braking work?

When an electric or hybrid vehicle decelerates, its motor(s) can work in reverse to capture some of the vehicle's kinetic energy and save it for future use in the battery. By using the powertrain to help slow the vehicle, regenerative braking also reduces reliance on the friction brakes, which would otherwise cast off this energy as heat.

What is one-pedal driving?

Some EVs have a setting or mode that allows the driver to control the vehicle's acceleration and deceleration with the accelerator alone. Pressing that pedal results in a request for power as usual, while lifting off it triggers regenerative braking that's aggressive enough to bring the vehicle to a stop. Many EVs with one-pedal functionality provide a choice of multiple levels of regen, and some have a button or paddle that will bump up the braking power when pressed.

Do electric cars have engines?

A fully electric vehicle does not have an internal-combustion engine. Instead, an electric motor (or multiple electric motors) drives the wheels using energy stored in a battery pack or hydrogen fuel cell. Conventional hybrids and plug-ins, often referred to as electrified vehicles, do use internal-combustion engines that are augmented by a motor or motors.

Do electric cars have transmissions?

Yes, electric vehicles have transmissions, but unlike the multi-gear units you'll find in internal-combustion cars, most EVs use a single-speed (aka direct-drive) unit to step down a motor's output before it reaches the wheels. Exceptions to this rule include the Porsche Taycan and its Audi e-tron GT cousin, which, in addition to using a single-speed transmission upfront, employ a two-speed gearbox on the rear axle to go faster and be more efficient on the highway.

How long does an electric car battery last?

An EV battery should last for most or all of the useful life of the car. That said, like any battery, the pack will degrade over time, reducing the amount of energy it can store and deliver. To allay fears of expensive battery replacement, most manufacturers currently provide generous warranty coverage—usually around eight years or 100,000 miles—for this component.

What is range anxiety?

Range anxiety is a common term for the worry or fear that a battery-powered vehicle will run out of juice before reaching a destination or at some other inopportune time, potentially stranding the driver. The term is thankfully becoming less relevant as the total range of new EVs continues to increase. Inclement weather, traffic, and driving style can affect range and lead to anxiety.

How much does it cost to charge an electric car?

The price to charge an EV's battery varies much like the cost to fill an internal-combustion vehicle's fuel tank. It depends both on the size of the battery pack (the tank) and the price of electricity (the fuel). In August 2022, the average cost of a kilowatt-hour of electricity for residential consumers was about 16 cents. At that rate, for an EV with a 100-kWh battery and a range of 300 miles, you're looking at an average cost of $16 to fully charge the battery and a cost per mile of just over five cents.

Are EV charging stations free?

There are some free public charging stations, mostly in municipal or business lots, but stations owned and operated by large charging networks are far more common. That said, some manufacturers give new-EV purchasers a certain amount of credit to use at a specific charging network, like Volkswagen with 36 months of free DC charging for the ID.4 at Electrify America stations.

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Cost savings

Technology

EV Charging

Plugging into the EV Lifestyle

Whether you're looking to buy a used electric car or you prefer an affordable new EV, here are some questions for you to think about first.

Read on to learn more about the benefits of electrification, as well as the ecological impact, cost, and tech associated with EVs.

Benefits of electrification

Eco-friendly

Driving to your next exciting destination is great, but spending money on fuel and spewing exhaust gasses isn't. Imagine driving with fewer (or even zero) emissions. There's a lot to think about beyond what does or doesn't come from the tailpipe.

Potential savings

While going EV won't save you a fortune overnight, the long-term savings are nothing to downplay, not to mention the potential tax incentives and federal credits that can lower your tax liability with eligible vehicles.

Latest technology

Step one on your journey toward green driving may start with deciding what best fits your lifestyle. Technology is transforming the auto industry with innovations that can enhance your green driving ambitions.

Cost Savings

Cost of electric cars

If higher upfront costs deter you from purchasing an EV, there are other long-term potential savings that could help offset those initial costs. The EV tax credit is one way for many EV owners to lower their tax liability. Charging at home will also help insulate you from fluctuating gas prices, and the sometimes high EV public charging rates. Maintenance costs can also make a difference for gas versus electric vehicles.

Learn more

Technology

Driving green tech

Savings and environment aside, the technology behind electrified vehicles is also advancing rapidly. Developments like solid-state batteries are on the horizon and can accelerate that advancement. There's actually a bunch of interesting new EV tech on the way, but what about the power grid? Is it ready for the next stage of EV adoption?

Learn more

EV Charging

Charging forward

As the power grid develops, figuring out how charging works is another major part of EV ownership. Where to charge your EV, charging times, whether it's safe to charge in the rain, and how to calculate range are some starting points to understand EV charging. You don't have to eliminate convenience from your search for the right EV purchase, compare vehicles to determine what works best for you.

Learn more

Frequently Asked Questions

1. What are green cars?

“Green” cars are typically broken down into three primary categories: hybrid, plug-in hybrid (PHEV), and all-electric (EV). When we refer to green cars, that’s what we mean.

2. What is an electric vehicle (EV)?

EVs get the power to spin their wheels from electric motors alone. (Conventional hybrids and plug-in hybrids have an internal-combustion engine to augment their electric motors.) An EV’s electrical energy is usually stored in a battery that is charged by an external source, although some use hydrogen fuel cells that generate electricity onboard.

3. Are electric cars better for the environment than internal-combustion vehicles?

The environmental advantages of EVs depend on several variables. First, the manufacture of an electric vehicle, specifically its motors and batteries, requires materials collected through mining. And while EVs have zero local emissions, the “fuel” used to create the electricity must also be taken into account — it may be generated sustainably, by wind or solar, or by burning fossil fuels. An EV is likely to be more environmentally friendly than a gas or diesel car over the long run.

4. How long does it take to charge an electric car?

EV charge times vary from vehicle to vehicle and based on the charging method. The size of the vehicle’s battery pack is a major factor in the time it takes to top up. A larger battery that can hold more energy (and allow a longer driving range) will take longer to charge, all other things being equal. Another potential impediment to speedy charging is the vehicle’s onboard charger, and how much electricity it allows to flow to the battery when using a Level 1 or Level 2 charging station.

The slowest charging method, Level 1, uses a household 110- to 120-volt plug and will generally replenish a battery’s charge in around 40 to 50 hours. Level 2 charging is quicker, taking anywhere from four to 10 hours to bring an EV to full strength. A DC fast-charger is the speediest option; it supplies DC power directly to the battery, bypassing an EV’s onboard charger. Models with sizable battery packs (e.g. Porsche Taycans and various Teslas) can charge using this method in less than 30 minutes. Keep in mind that frequent fast-charging isn’t good for the battery. Also, automakers warn against regularly discharging the battery below 20% or charging all the way to 100%, as it will shorten the pack’s lifespan.

5. How does the federal EV tax credit work?

As part of the U.S. government's Inflation Reduction Act, a federal EV tax credit of up to $7,500 is available if both you and the vehicle qualify. A purchased model must be built in North America, the manufacturer's suggested retail price cannot exceed the limit for its particular vehicle class, and it must be built with battery components and minerals sourced from certain regions. In order to qualify for the credit, buyers' annual income is also a factor. A tax credit of up to $4,000 may be available for used cars, regardless of their origin. When leasing a vehicle, lessors are able to claim the credit and may pass that along when negotiating lease terms — without the same vehicle and customer income qualifications that purchases require. Leases on foreign-made EVs may be available as well.

6. Are electric cars better than gas cars?

Whether an EV is better for short trips or long trips than a gas car depends on how you use it. EVs might be best for drivers who have a predictable schedule, travel less than 100 miles a day, and have the ability to charge the vehicle at the places where they spend the most time — home, work, and shopping centers. People who cover long distances regularly need either an EV with a long range, or an EV plus another vehicle with an internal-combustion engine to help with road trips.

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In terms of sustainable driving, “green” vehicles are typically broken down into three primary categories: hybrid, plug-in hybrid (PHEV) and all-electric (EV). When we refer to green cars, that's what we mean. This site is for educational purposes only. The third parties listed are not affiliated with Capital One and are solely responsible for their opinions, products and services. Capital One does not provide, endorse or guarantee any third-party product, service, information or recommendation listed above. The information presented in this article is believed to be accurate at the time of publication, but is subject to change. The images shown are for illustration purposes only and may not be an exact representation of the product. The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the availability or suitability of any Capital One product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional.

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