• by Montgomery Miller
•  February 15th, 2019

Hybrid vs. Electric Vehicles: What’s Next?

Today, there are a lot of choices when it comes to deciding between a traditional gas driven vehicle, a hybrid vehicle or an all-electric vehicle. The technology is changing so rapidly that what was available one year ago, has changed dramatically. As you might imagine, there are pluses and minuses to be considered for every type of vehicle, but in the final analysis, a lot will depend on your needs, budget and lifestyle.

There are also some Federal and State tax incentives to buying either a plug-in EV or a plugin-hybrid or PHEV, but we’ll get to that later in this article. State tax incentives are not available in every State so check with your State government website to see if your State is included.

Everyone knows about Tesla. It’s one of the most publicized automotive brands in the world, even without the support of a massive Television campaign. All Tesla models are plug-in EV or full electric vehicles. For such a young company, Tesla has continued to innovate with improved technologies and increased battery capacity through an important partnership with Panasonic.

Faster charging times and longer driving range have made Tesla an attractive purchase for buyers interested in driving an EV. Where EV technology is appealing as an alternate to PHEVs and traditional gas engines, the lack of a nationwide network of charging stations remains a significant impairment to multi-state or cross-country driving. I you’re just commuting in a 100-mile radius from your home, the Tesla can handle it.

This issue is diminishing according to a February 2018 report from EcoWatch.com which found that EVgo, the largest public network of fast-charging stations in the U.S., charged 40 million miles of electric driving in 2017, a dramatic increase compared to the 22 million EV miles charged in 2016.

In 2018, the EVgo network grew by an impressive 20 percent, offering more than 1,000 DC fast chargers across 66 markets nationwide. Network usage set a record with 1.1 million charging sessions, an increase of 50 percent.

EVgo stated that the 13 million kilowatt hours delivered from the network corresponded to 1.6 million gallons of gasoline saved and prevented the release of 9,000 metric tons of carbon emissions.

Tesla is certainly not the only game in town. BMW offers the sporty i3 EV with the same luxury features one expects in a BMW. There is the Fiat 500e; the stylish Jaguar I-Pace; the e-Golf from Volkswagen; the Nissan Leaf; the Kia Soul Electric; the Chevrolet Bolt EV and the Ford Focus EV making up the leaders in the EV pack. Although Lexus has filed a Trade Mark hinting at an all-electric model, there has been no official announcement that an EV will soon be on showroom floors.

Electric vehicles do offer several advantages over plug-in hybrids (PHEVs). The primary advantage is that EVs benefit the environment more than plug-in hybrids, since they do not produce any hydrocarbon emissions. For consumers who want to minimize their carbon footprint, this advantage is a big deal.

Currently, there are more Plug-in Hybrid models available with BMW, Ford, Mercedes-Benz, Porsche, and Volvo offering the biggest selection.

Plug-in hybrid (PHEVs) vehicles also have some advantages and disadvantages of their own. Where range is an issue for EVs, PHEVs combine gasoline engines with electric powertrains allowing PHEV drivers to enjoy the best of both worlds: the efficiency of an EV for around town driving together with the traditional gas engine range for extended drives. There are non-plugin hybrids available but most only offer a very limited range driving on electric only and so we’ll talk about those another day.

EVs offer more variety in terms of model styles than do the manufacturers of PHEVs. So, if style and luxury are important to you, a true EV from one of the luxury manufacturers might be a better choice.

From a tax perspective, the Federal Electric Vehicle Tax Credit is available for both EVs and PHEVs, but the available credits are changing based on the model you choose to purchase. That being said, non-plugin hybrid Federal tax credits are off the table.

EVs are still eligible for a $7,500 tax credit, with some important distinctions:

The vehicle must be purchased in or after 2010.
You must be the original owner.

To get the full credit, the vehicle must fall within the first 200,000 units sold of that model, after which a gradual phase-out begins.

For example, Tesla, which passed the 200,000-mile threshold for EV sales is now only eligible for a Federal credit of $3,750 through June of 2019 for it’s models “S”, Model “X” and Model 3 Long Range vehicles. In July of 2019, the credit for these models will drop to $1,875. Credits for the 2008-11 Tesla Roadster are no longer available.

If the tax credits are an incentive for you, now might be a good time to take advantage of them as they will all be phased out as EVs and PHEVs become more popular and cross the 200,000 mark in unit sales.

You’ll find a very helpful chart on the available tax credits by brand here.   

Overall, the number of EVs offered will likely increase since the data shows that buyers interested in electric technology tend to be more attracted to the all-electric EV vs. the PHEV.

If the cost of ownership is an important factor in your purchase decision, the difference between an EV and a conventional gas engine is significant. According to a 2018 study from the University of Michigan's Transportation Research Institute, EVs cost less than half as much to operate as gas-powered cars. The average cost to operate an EV in the United States is $485 per year, while the average for a gasoline-powered vehicle is $1,117.

And while replacement costs for the larger, complex EV battery may be high, the yearly maintenance for an EV is less due to the fact that EVs have fewer complex mechanical parts to maintain and wear out such as an engine and transmission.

At the end of the day, you’ve got some really great choices today when it comes to shopping for either an EV or PHEV.