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5 Reasons Why You Should Plan Ahead Before Buying an Electric Car
Sadly, these days it’s not possible to leisurely head to a dealership and pick out the perfect vehicle. Inventory remains at record lows, and supply chain shortages are going to get worse before they get better. The electric lifestyle is an adjustment for most first-time EV buyers, and preparation eases the transition considerably. You don’t want your new car honeymoon to be ruined by missed opportunities or misconceptions. Here are five reasons why you should plan ahead before making your first electric car purchase.
Inventory is hard to come by
Inventory is slim to none for all new autos, and electric vehicles have been hit especially hard by the supply shortages of 2021 and 2022. EVs are the product of truly global supply chains, and that makes them particularly vulnerable to disruptions. EV leader Tesla has so far avoided the worst of the supply shortages, however high demand has new orders seeing delivery dates over 8 months away.
Tesla isn’t the only automaker seeing serious delays. The popular Volkswagen ID.4, Ford Mustang Mach-E and Hyundai IONIQ 5 are all hard to find on a dealer lot nationwide. Data from Cox Automotive shows that day’s supply, the preferred industry metric for new car availability, is dismal for several electric vehicle makers.
Here’s the day’s supply for popular brands that sell electric cars in America. Tesla, Rivian and Lucid sell directly to consumers, so there is no available data for their models.
- Kia: 19
- Volkswagen: 29 days
- Nissan: 34
- Hyundai: 35
- Chevrolet: 39
- Ford: 40
As bad as these supply estimates are, many shoppers note that many dealers have just a few cars on the lot. Don’t expect to find exactly what you want at your local dealership.
The solution to EV inventory woes: place an order
If you’re eager to get yourself into a new car as soon as possible, check out CarEdge Car Search to locate electric cars around the country. Beware misleading postings from dealerships. I’ve found that about half of dealer postings are actually misrepresenting cars that are already spoken for.
It’s not fun, but it’s worth it to call around. Soon, you may find yourself forgetting which dealers you’ve contacted, so it’s wise to keep a spreadsheet of who you’ve reached out to, and their inventory situation. While you’re at it, keep track of what their dealer markups are for EVs. Some dealers are taking advantage of the situation and charging $5,000, $10,000 or even $20,000 over MSRP.
If you don’t find what you’re looking for at a competitive price point, most automakers let you place an order for their popular EVs. Sometimes, you’ll have to order through a dealership, so keep that in mind if you don’t see a way to place an order on the automaker’s website. For example, the Hyundai IONIQ 5 and Cadillac Lyriq can only be ordered through a participating dealer.
If you have your eyes set on a Tesla, placing an order is simple. In fact, it takes just a few minutes (but requires a non-refundable deposit). However, demand far exceeds supply for Tesla models. Expect to wait 6-10 months for a Model Y.
Make plans for charging your electric car
If you drive less than 30 miles a day and live near public fast chargers, don’t sweat it. However, long distance commuters and rural EV owners will be glad they thought about how to meet their charging needs.
Over 80% of electric car charging is done at home at affordable residential electricity rates, costing less than $15 for a full charge. If you skip any special home charger installation, plugging in to a typical wall socket will add two to four miles of range per hour. Over 12 hours (at night, for example), a standard wall outlet will add about 25 to 50 miles of range. However, frequent travelers will get tired of the slow charging speeds possible with basic 110-volt wall outlets.
For those who regularly drive more than 50 miles each day, it will likely be worth the investment to get a level 2 home charger installed. A level 2 charger increases power supply to 240 volts, and adds about 20 to 40 miles of range per hour. Unless you’re lucky enough to already have a 240-volt dryer outlet in your garage, installing a level 2 charger at home can cost between $700 and $1500, depending on labor costs and the condition of existing electrical infrastructure in the home.
We’ve covered all you need to know about how much it costs to charge an electric car in our CarEdge guide to charging.
Do you need fast charging?
At some point, a public DC fast charger will be essential for travels. If you purchase an electric vehicle with over 200 miles of range, getting to one shouldn’t be a problem. However, there continues to be wide variation in charge times, and that will make or break the EV ownership experience for frequent travelers.
The Hyundai IONIQ 5, Kia EV6 and Tesla models can all add about 200 miles of driving range in about 20 minutes. However, the 2023 Subaru Solterra EV takes 56 minutes to add the same range. Pay attention to the details, and consider how each electric model would fit into your lifestyle and needs.
Taxes, rebates and more: When will you benefit the most from EV incentives?
For many households, tax liability fluctuates from year to year. If you know when a particularly large tax bill will be due, it might be a great time to buy an electric vehicle. The current federal electric vehicle tax credit is worth up to $7,500, however tax filers who owe at least as much in annual tax liability will get the full benefit from the credit. For example, a family who has a federal tax liability of $5,500 will only be able to claim $5,500 of the EV tax credit. That’s why it makes sense to purchase an EV when tax liability is expected to be at least $7,500.
Plug-in hybrids qualify for between $2,500 and $7,500, depending on battery size.
The credit (non-refundable) remains in effect for all automakers who have yet to reach the law’s 200,000-vehicle limit. Tesla and General Motors have surpassed the limit, so buyers of the Bolt, Silverado EV, and Tesla models won’t benefit from this generous incentive unless Congress overhauls the law. Revisions to the EV tax credit are possible in 2022. Stay up to date with the latest EV tax credit developments here.
Where will you go for EV service?
If you live anywhere near a major metropolitan area, especially along the coasts, you’ve got nothing to worry about. The rest of us need to bear in mind the limits of EV newcomers like Rivian, Lucid and Fisker when it comes to serviceability. Tesla now has 150 service centers across the country, but a few states remain without a Tesla service center. Fisker’s affordable Ocean electric SUV is loaded with impressive specs, however service centers will be few and far between for years to come.
This is where the strength of legacy automakers really stands out. A Tesla or Rivian service center will be hard to find in rural America, however legacy automakers have established dealer networks in every corner of the country.
Before you go out and buy an EV, have a plan for how and where you’ll get it serviced. Electric vehicles come with a great warranty, so you’ll definitely want a way to take advantage of it.
Consider upcoming models and updates before buying
There’s always something bigger and better in the development pipeline. Newer models tout more range, faster charging and improved performance. On the other hand, prices tick upward with every added feature.
When does it make sense to hold out for the latest and greatest? It depends on what you value most, and which electric vehicle features you desire most. Looking to get more range out of a Volkswagen or Hyundai EV? 2023 models get a slight bump. Craving faster charging? Waiting a year might save you five minutes per charge. Don’t expect huge changes from one year to the next. Automakers have set the expectation for incremental improvements.
Ultimately, it will be up to you to decide what’s worth the wait, and when it makes sense to buy (or lease) an electric car.
CarEdge’s Take
Planning ahead for your electric car purchase not only has the potential to save you money, it also makes the transition to the electric lifestyle a lot easier. It’s important to consider your household’s unique needs and wants as you shop around. In 2022, EVs represent past, present and leading-edge technologies at a wide range of price points. Here at CarEdge, we’re keeping track of EV availability in 2022.
As always, CarEdge Electric is here to empower you with the knowledge to approach car ownership with confidence. Our weekly EV newsletter is full of helpful tips, the latest EV news, and new car reviews. Consider becoming a member for expert insights and one-on-one guidance throughout the car buying process.
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Electric Vehicle Price Increases: War in Ukraine to Send Battery Prices Skyrocketing
The manufacturing of electric vehicles is a global process, with raw materials from every corner of the globe playing a vital role in battery chemistry. New forecasts from automotive energy analysts predict massive increases in electric vehicle production costs due to the entanglement of EV supply chains in the ongoing Russian invasion of Ukraine. The latest supply chain worries are on top of the ongoing chip shortage that threatens to stretch through 2022.
Costly raw materials affect EV makers
In 2021, fully-electric and plug-in hybrid passenger vehicles soared to 9% of global new vehicle market share. In Europe, EVs now make up 19% of all passenger vehicle sales. Even in the United States, electric car market share is approaching 5%. Although EV sales continue to be subdued by supply shortages and lack of inventory, most automakers remain on a path towards 100% electrified sales. However, getting there is easier said than done without the raw materials needed to make gigawatt-hours of batteries. There are dozens of EVs on sale in 2022, but finding one on a dealer lot is no easy task.
A new report by S&P Global Mobility highlights the unforeseen costs piling onto EV battery production because of the Russian invasion of Ukraine, and the resulting international sanctions. Building an electric car is about to get costlier, and buying one will get more expensive.
Tesla Model Y prices up 26% since 2020
The analysts at S&P Global Mobility estimate that the best-selling Tesla Model Y could see input costs for battery raw materials surge by $8,000 per vehicle this year. Tesla recently increased Model Y prices for the tenth time in as many months to a base price of $62,990. Just a year ago, the same model listed for $49,990.
Mercedes EV prices likely to increase
The same report forecasts that production costs for the popular Mercedes-Benz EQS could skyrocket by $11,000 year-over-year. The EQS luxury sedan already starts at an MSRP of $103,360, and climbs to $126,360 for the highest trim. With production costs eating into Mercedes’ margins, MSRPs are likely to climb higher any day now.
Nickel prices up tenfold, EV cost parity delayed
For years, EV advocates (and Elon Musk) have touted the importance of electric cars reaching cost parity with combustion-powered vehicles. It’s widely believed that when electric cars cost the same as an equivalent ICE car, the masses will rapidly transition to electric mobility.
The latest supply chain disruptions have analysts delaying the arrival of EV cost parity. In the months leading up to the war in Ukraine, raw materials needed for battery production were already becoming more costly. Cleantechnica reported back in November that lithium carbonate prices surged by 313%, cobalt hydroxide was up nearly 82%, and nickel sulfate rose by 34% over the course of 2021.
S&P Global Mobility said that Russia’s invasion of Ukraine is inflating raw material prices even further. Russia is the world’s third-largest supplier of nickel. German supplier BASF said it will not sign new agreements with Russian nickel suppliers because of the invasion. The analysts suspect that other manufacturers will take similar actions.
How much will electric car prices increase in 2022?
The latest data and expert analyses point towards a 5-10% increase in prices for most EV models in 2022. Tesla has already seen a 26% increase in prices since 2022, including steep price hikes in early 2022.
There are rumors that Hyundai may soon be raising MSRPs for the popular IONIQ 5, and Ford increased prices for the Mustang Mach-E by $1,000-$3,000 in February. When is the most affordable time to buy an electric car? If you’re set on buying an EV in 2022, make a purchase as soon as possible. Unfortunately, it looks like inventory and pricing are only going to get worse for the foreseeable future.
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What Do Interest Rates Mean For Car Buyers?
Following the ups and downs of the past two years, automakers, dealers and buyers have seen it all. Low demand in 2020, not enough cars to sell in 2022, and wild swings in pricing. What about the consumer perspective? Things are changing quickly, and it can be hard to keep track. What do interest rate hikes mean for car buyers in 2023? We spoke with CarEdge car buying expert Mario Rodriguez to find out.
How will higher interest rates impact new car buyers?
There are very few automaker or dealer incentives right now. The sellers have the upper hand in today’s market. They’ve raised MSRPs, and additional dealer markups have piled on. Selling new cars, dealers can toy with the profit equation. Both front-end and back-end profit scenarios are on the table for a dealer.
Either they could increase the car’s price and drop interest rates via captive lending, or take the opposite approach and keep car prices the same but raise interest rates for buyers. When it comes to interest rates, however, NEW car buyers probably won’t see much of a change, at least after this first Fed rate hike.
Automakers can afford to subsidize the small rate increases because of captive lenders, not to mention the record profits they make per vehicle sold right now. There’s been a lot of inflation, but not to the magnitude of the MSRP hikes we’ve seen.
What is a good interest rate for a new car?
As of November 2023, attractive financing rates for new cars range from 0.0% to 2.9% APR. Black Friday deals feature several low APR offers.
Drivers with great credit scores should keep an eye out for anything below 3% APR for new car buyers.
How will higher interest rates impact used car buyers?
This is where buyers will feel the pinch. Used cars sell for less (on average), and a lot more math is involved with profit margins for dealers. Private party lenders are quicker to reflect baseline rate hikes. It might take a few months for new car loan rates to rise noticeably, however used car loan rates will rise immediately.
What is a good interest rate for a used car?
Through a credit union, used car buyers with great credit scores can secure a used car loan for under 7% APR. As of November 2023, the average used car loan rate is 14% APR.
It’s important to bear in mind that a higher interest rate will cost buyers who demand an expensive vehicle more than if a cheaper vehicle was to be purchased. A 6% interest rate will result in about $6,000 in total interest paid for a $40,000 loan over 60 months, but just $2,400 for a $15,000 loan over the same term.
Will there be more interest rate hikes?
More interest rate hikes are likely in early 2024. The latest consumer sentiment and spending data shows that Americans are increasingly getting used to a high rate of inflation. That’s not a good sign, and leads many experts to think that the US Federal Reserve will issue at least a few more rate hikes to combat inflation.
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Japan Earthquake Forces Toyota to Cut Production AGAIN; Chip Suppliers Affected
A magnitude 7.4 earthquake struck off the coast of Japan on Wednesday, bringing painful memories of the 2011 earthquake back for many. Four people died in the tremor and its aftermath, and Japanese infrastructure took a severe hit. Areas north of Tokyo have experienced power outages affecting 2 million people and thousands of factories.
Japan Earthquake Affects 80% of Toyota’s Factories
Railways across much of central and northern Japan are offline after the earthquake destabilized bridges across the region. Some roads were damaged as well. Without transportation corridors, Japanese automaker’s domestic supply chains can’t function.
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Automotive News reports that Toyota will suspend operations on 18 production lines at 11 factories. In total, Toyota operates 28 production lines at 14 factories in Japan. Toyota said they will lose about 20,000 vehicles scheduled for production because of the earthquake. The earthquake shutdown will directly affect production of the Toyota RAV4, Land Cruiser, Yaris, and other models sold abroad.
Multiple Lexus models are also impacted. The Lexus LS and IC sedans, RC and LC coupes and NX crossover will all see production cuts because of Wednesday’s earthquake.
A Bad Week For Toyota
The latest supply chain and production woes come just days after Toyota announced scaled-back production targets for 2022. Toyota’s production cuts were made public BEFORE the latest earthquake. The automaker already cautioned that production targets may need to be downgraded further, and that’s looking more likely after the latest natural disaster.
Before the earthquake, Toyota slashed April production targets by 150,000 vehicles to a total of 750,000. Looking ahead, Toyota expects production to be 10 percent lower in May and 5 percent lower in June than previously estimated. Citing the instability of supply chains, Toyota will review production plans on a monthly and three-month basis.
Here’s everything you need to know about the latest chip shortage updates.
Chip Makers Affected By Earthquake
Murata, the top global supplier of ceramic capacitors used in cars, said it had suspended operations at four factories in Japan following the quake. The impacts of Murata’s production shutdown will be felt for months to come, and not just among Japanese automakers.
The quake disrupted production at Kioxia’s plant in Japan, according to TrendForce. The affected factory is responsible for about 8% of Kioxia’s production. The company provides chips to a variety of industries, including auto manufacturing.
The industry analysts at TrendForce say that damage to semiconductor chip production is inevitable following the earthquake.
“Due to the extremely high stability required in the crystal growth process, the industry has not yet announced the impact of the quake. TrendForce specifies, in addition to shutdown inspections, damage to machines and silicon wafer input is inevitable.”
The chip shortage and new car inventory shortage are not getting any better. In fact, it’s getting worse. It seems like the situation changes daily, with geopolitics and mother nature taking a stab at disrupting the automotive industry just as it tries to get back on its feet.
Check back soon for the latest CarEdge updates. Bookmark our chip shortage update page for the latest weekly updates on the supply chain disruptions in 2022.
The 2024 Honda Prologue Electric SUV: Will It Be Worth the Wait?
Honda is late to the electric vehicle party. Now, Honda is depending on General Motors to get their EV plans off of the drawing board and onto the ground. Will their much-anticipated Prologue electric SUV be worth the wait? The automaker’s first North American EV will undoubtedly be compared to their decades-long reputation for great hybrid powertrains. As the 2024 Honda Prologue nears production, here’s what you need to know about Honda’s plans for EVs.
General Motors Lends Honda a Jump-Start For EVs
This was the pre-production concept….
This is the production-ready Prologue EV…
Honda’s electric SUV will be Honda on the outside, and GM on the inside. The automaker didn’t quite play their cards right when it comes to electrification. After stubbornly sticking to internal combustion and hybrid vehicles for the past several development cycles, Honda is now scrambling to make one heck of a U-turn. Why? As a global automaker, Honda pays close attention to the regulatory environment in Europe, Asia, America and beyond. Most of Honda’s major markets have announced timelines for the elimination of new combustion vehicle sales as part of efforts to combat climate change and poor air quality.
The European Union will ban sales of new gas and diesel cars, including hybrid vehicles, starting in 2035. Japan and the United States have also announced a series of policies aimed at encouraging the adoption of EVs. Several European countries are even establishing EV-only zones in densely populated urban centers in an effort to slash emissions for public health. If Honda wants to have a future, they have to go electric.
In 2020, Honda and General Motors announced a partnership that will bring Honda’s first North American electric vehicle to market mid-decade. Why the collab? GM has invested BILLIONS in its new Ultium battery technology and electric motors, and they’re eager to increase their returns by sharing with a competitor in dire need of an electrification jump-start. Honda is far behind the others, even behind other former EV skeptics like Toyota.
General Motors will do everything except design in the exterior and interior of the 2024 Honda Prologue. GM will even build the Prologue in its North American factories. By mid-2023, Honda-branded EVs will be leaving GM plants in Michigan.
2024 Honda Prologue Specs: What We Know
All that we can infer about Honda Prologue specs comes from what’s been announced about the 2023 Cadillac Lyriq, which shares GM’s Ultium platform with the Prologue. The Prologue is likely to be about the size and weight as the Lyriq, since they will share the same drivetrain and battery. Honda is keeping their cards close, so it’s the best we have for now.
Arriving in mid-2022, the Cadillac Lyriq will have a large 100 kilowatt-hour battery and a single rear-mounted permanent magnet electric motor delivering 340 horsepower and 325 lb-ft of torque. An all-wheel drive version will arrive later.
The Lyriq can receive 190 kW charging at a DC fast charger, which is enough to add 200 miles of range in a half-hour. The Lyriq will have a top-end range of about 300 miles, and we expect the Prologue to have similar figures. We recently featured the Cadillac Lyriq with a full CarEdge preview if you’d like to know more about the electric crossover entering production in 2022.
Also, we have everything you need to know about GM’s new Ultium electric platform here. It’s fascinating stuff!
Honda Prologue Pricing
Considering how other Ultium-powered EVs are priced for the 2023 model year and where Honda is positioned in the overall market, we estimate that the 2024 Honda Prologue pricing will start around $45,000. Fully-optioned trims with all-wheel drive are likely to cost between $50,000-$55,000. Lithium prices are largely to blame for the worsening inaffordability of EVs.
Honda Electric Cars: Are More Honda EVs On the Way?
Honda does already have a full BEV for sale, but it’s not coming to North America. The pocket-sized Honda ‘e’ is a much-loved city car in Europe. It seems to appeal to the same folks who love their Mini Coopers. The Honda e wouldn’t do well on the sparse interstates of America. It only has 137 miles of range.
General Motors is providing the Ultium platform for an Acura EV that will arrive shortly after the Prologue. Nothing else is known about the Acura EV, but it will likely share all of the same underpinnings as the Honda Prologue SUV.
Still, Honda has jumped on the all-EV bandwagon. Or rather, they were left with few options considering the global regulatory environment. Honda’s target for the electrification of its full lineup is planned for 2040. That’s 5 to 10 years behind many competitors, including their partner GM.
When Will the Honda Prologue Be Available?
Honda updated their Prologue configurator in October to 2024 availability. If that’s too long of a wait, dozens of other EVs will be on sale by mid-2022. In 2022, the Honda Prologue’s direct competitors in the crossover SUV segment are already battling it out for market share. These are the top picks for car buyers eager to get into an electric crossover sooner:
- 2022 Volkswagen ID.4
- 2022 Hyundai IONIQ 5
- 2022 Kia EV6
- 2023 Cadillac Lyriq
- 2022 Tesla Model Y
- 2022 Ford Mustang Mach-E
- 2023 Fisker Ocean
Need an EV in 2022? Here’s the pricing and availability of every electric vehicle on the market in 2022.
We’ll be sure to update this page as more information becomes available. Add it to your bookmarks if you’re excited about the first Honda EV in America!
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The 10 Best Cars to Lease in 2022
Buying a car is tricky in today’s market, and even leasing can feel like three-dimensional chess these days. Although 2022 isn’t the best time in history to buy or lease a car, some shoppers don’t have a choice. It doesn’t help that the average new car payment is a bank-draining $650 a month in 2022. Fortunately, leasing provides a window of opportunity for those who don’t mind what is essentially a long-term rental. These are the best car lease deals in 2022. All examples assume a 5% down payment at signing.
Not sure where to start? Head over to our CarEdge complete guide to leasing to find out what leasing a car is, and when it’s a good idea.
2022 Mitsubishi Outlander PHEV
The plug-in hybrid (PHEV) version of the Mitsubishi Outlander sells for an average MSRP of $40,356 depending on the trim. If leasing is an option, you can get into this versatile SUV for $412 per month with an allowance of 12,000 miles a year. How does a plug-in hybrid work? The Outlander can drive 24 miles on pure electricity (which is much cheaper than gas), and then can drive another 300 miles as a regular hybrid system with the help of a combustion engine. It’s kind of the best of both worlds, especially for a lease.
2022 Hyundai Kona EV
The Kona EV made our CarEdge list of the five best electric cars you can get for under $50,000. The Hyundai Kona EV has an average MSRP of about $40,000, and you can lease one for just $401 a month. The Kona is a great alternative for those considering the Chevy Bolt. Plus, it comes with Hyundai’s unbeatable 10 year, 100,000 mile battery and electric powertrain warranty. This front-wheel drive subcompact crossover gets 258 miles on the charge, exceptional range for a budget EV. Some owners get over 275 miles on a single charge.
2022 Toyota Tundra 4WD
If you can find one that’s not marked up, the 2022 Toyota Tundra 4WD is $51,400 at MSRP. If you’re open to leasing, you can sign up for $525 a month for 36 months and 36,000 miles. That’s $125 less per month than today’s average monthly finance payment. The downside? The Tacoma gets 14 miles per gallon when gas prices are well over $4 per gallon.
2022 Toyota Tacoma
Last year, the Toyota Tacoma won Best Buy of the Year award from Kelly Blue Book in the mid-size truck category, and now you can lease a 2022 model for under $400 a month. If you buy, the 2022 Tacoma has an average MSRP of $36,300. If you lease, monthly payments are as low as $361.
2021 Honda Civic Type R
With an MSRP of $41,900, it’s a pleasant surprise that you can get into a Civic Type R lease for just $410 a month. Over 300 horsepower propels this budget racer to 60 mph in just 5.3 seconds. The challenge is finding one on a dealer lot.
2021 Chevrolet Bolt
Pre-facelift, the 2021 Chevy Bolt was the least ‘sexy’ electric vehicle on the market. It may look bland, have slow charging, and be subject to one of the most scrutinized recalls in recent memory, but you can lease one for cheap. The 2021 Chevrolet Bolt sells for $38,567 (average MSRP across trim levels), but you can lease one for $367.63 a month. Just make sure that you have proof from the dealer that your Bolt has already had the recall fix. Learn more about the Chevy Bolt recall and vehicle specs here.
2022 Chevrolet Bolt
The 2022 model year gets a refreshed, modernized front fascia and improved interior. Sadly, driving range figures for the 2022 year remain the same. At least it doesn’t look like a cheap appliance anymore. Here’s the great news: the 2022 Chevrolet Bolt has a lower MSRP than the 2021 model. GM electric vehicles no longer qualify for the federal EV tax credit, so GM must have felt compelled to keep pricing competitive. Whether you go for a 2021 or 2022 Bolt, ensure that the car has had all of the mandatory fire-related recall fixes completed.
You can lease a 2022 Chevy Bolt for $312 a month for 36 months. If you’re considering buying, remember that the $33,595 price tag will not get any help from the federal tax credit. State and local incentives may apply, depending on where you live. Here’s everything you need to know about the 2022 Chevrolet Bolt.
2022 Chevrolet Bolt EUV
The Bolt EUV is the slightly larger new sibling to the regular Chevy Bolt EV. The EUV sells for $36,245, but you can lease one for just $341 per month. Range is 247 miles, but charging isn’t that great. Learn more about the Bolt here.
2022 Kia Niro EV
The 2022 Kia Niro EV has an average MSRP of $43,500, but it can be all yours (for 36 months) for just $395 with a lease. There’s generous lease support for the Niro for a few reasons. The Kia Niro is about to receive a major upgrade in 2022, and it’s being overshadowed by the new Kia EV6 electric crossover. The Niro can make it 239 miles on a charge, and charging from 0-80% takes about one hour at a DC fast charger. However, if you plug it in at home, it should work just fine for those who drive less than 50 miles a day.
2021 BMW i3
Why is the 2021 BMW i3 such a phenomenal deal in 2022? It was recently discontinued, but it’s still a great option if you’re looking for an affordable, low-emissions way to get around town. Keep in mind that it’s no Tesla. The i3 gets 200 miles of range, 153 of which are on pure electricity. Not to be confused with the new BMW iX3, the 2021 i3 has an optional range extender (on the BMW i3 REX version). All trims considered, the 2021 BMW i3 has an average MSRP of $48,970 while supplies last.
If you’re looking for an all or mostly-electric bargain lease, you can lease the 2021 BMW i3 for $425/month. That’s well under the budget-friendly 10% threshold for a smart lease.
Have questions or comments about the best car lease deals in 2022? Or maybe you’d simply love to connect with fellow car buyers and auto enthusiasts? Check out the CarEdge Community at caredge.kinsta.cloud!
The Consumer’s Guide to Leasing a Car in 2026
Buying a new car is rarely a wise financial decision. Truthfully, cars are depreciating assets. That means from the moment you drive off the lot with your shiny new wheels, you’re actually losing money.
For some car buyers, leasing is a great way around depreciation. However, leasing isn’t for everyone. For many consumers, it’s worth asking the question “what does it mean to lease a car?”. In this guide to leasing a car, we’ll explain all there is to know about leasing, and how to shop smart in 2026.
What Is a Car Lease?
The last time a car commercial grabbed your attention with an attractive lease deal, it probably included a whirlwind of rates, payments and terms crammed into thirty seconds. What exactly is a car lease? An auto lease is a long term rental agreement for a vehicle that is subject to specific terms and conditions. The lease terms are agreed upon by the customer and dealership (or automaker in the case of Tesla, Rivian and Lucid), and a third-party leasing company who actually takes ownership of the vehicle (and then leases it to you).
There are four parts to a lease:
1) The capitalized cost (which is the out-the-door price on a lease)
2) The residual value of the vehicle
3) The money factor
4) The state sales tax
These four factors determine the total cost of the lease, and in turn the monthly payment. Let’s talk about the details.
Cap Cost
Instead of negotiating an out-the-door price (which is the price of the vehicle plus all taxes and fees), you negotiate the capitalized cost (also referred to as the “cap cost”) of the lease. The cap cost is the amount that the leasing company is paying for the vehicle. This will include:
- The negotiated selling price
- Doc fee
- Miscellaneous fees
- Additional products
Some of these charges are negotiable. For example, you don’t need nitrogen-inflated tires or security etching that you didn’t ask for billed on your lease agreement. For every $1,000 in additional cap cost, that will roughly translate to $27 a month in payment on a 36 month lease. Take a long, hard look at the itemized invoice before signing anything!
👉 Here’s a guide to which dealer fees are legit, and which you can negotiate.
Residual Value
Residuals are a percentage of the MSRP as set by the leasing company, and they are not negotiable. The residual value is the vehicle’s projected value at the end of the lease term. When you lease, you pay for the amount of depreciation that will occur over the course of the lease term.
For example, if the residual on a 36 month lease is .75 (or 75%), your lease will include payment that covers the 25% expected loss in value over the course of 36 months.
Residual values are not negotiable and they are set by the leasing company based on allotted annual miles to be driven. Specifically, 7,500, 10,000, 12,000 or 15,000 are the standard mileage amounts that are normally offered.
Dealers cannot modify or adjust the residual percentages other than for additional annual miles allowed to be driven. Check out an example of how residual values fit into leasing here. The residual value is disclosed on the lease as the amount that you can purchase the vehicle for at lease end.
The Money Factor
The money factor is set by the lender and can be marked up to the consumer, much like on a car loan. When a buyer finances a car, the dealer works with a number of lenders behind the scenes to get an attractive rate. However, that’s not the rate that the salesperson closing the deal will quote. Dealers markup loans, and pocket the difference. Fascinating and distressing, right? Here are all the ways that dealers make money when selling you a car.
With a car lease, dealers make money by marking up the money factor on a lease. The lender charges the dealer a money factor of say, .00125, and the dealer marks it up 50, 75 or even 100 basis points. The difference between the buy rate (what the lender charges the dealer) and the marked up rate (what you’re quoted) is additional backend profit on the lease for the dealer.
You should always try to negotiate the money factor to the buy rate or as close to the buy rate as you can get!
Sales Tax
Taxes in most states are added to the total price of the lease. NY, NJ, MN, OH, and GA charge sales tax upfront on the total amount of the lease payments. VA, MD, and TX charge sales tax on the total selling price of the vehicle (the cap cost). In all other states, sales tax is simply factored into your monthly payment.
Sales tax is not negotiable, but it does vary from state to state.
Who Owns the Car In a Lease?
Simply put, the leasing company owns the vehicle that you are leasing from them. In most cases that will either be that brand’s captive lender or an outside bank. The vehicle will be registered in both the leasing company’s name and your name as the lessee. You will be responsible for registration renewals, maintenance and all insurance.
It’s also possible that the leasing company financed the vehicle that they bought from the dealer. In that case, the financial institution would possess the title until the leasing company pays it off.
Estimate Your Monthly Lease Payment
At CarEdge, we’re always working on something new to help demystify car buying, car selling, and ownership. If you’re considering a new car lease, estimate your monthly payment in seconds with our latest free tool: our car lease calculator.
Do Auto Leases Require a Down Payment?
No, but If you want to lower your monthly payment, consider making a down payment on your lease. In a car lease, the down payment is called a capitalized cost reduction, or cap cost reduction. These up front payments are optional, but they can help make leasing more affordable by lowering the monthly payments. The payment is lower because the cap cost reduction has lowered the cost of the vehicle to the lender.
Any advertised lease payment typically requires a specified amount of cash down. For example, an advertised lease monthly payment may include $3000 cash down plus the first payment, acquisition fee, tax, title, registration and dealer fees.
Remember as a rule of thumb, for every $1000 in cap cost reduction on a 36 month lease your monthly payment will be reduced about $27.
Shoppers with bad credit may be required to make a security deposit, which is returned once the car is returned at the end of the lease.
Why I Put Zero Down On My Leases
I put zero down on my leases and when I say zero, I mean not even a penny. Cash down on a lease just reduces the cost of the vehicle to the lease company and if the vehicle were ever declared a total loss, that money that you had put down is lost forever. A lease down payment is not covered by your auto insurance. They only cover the value of the vehicle, not the value of the cash that you put down.
Whatever money you are thinking about putting down, deposit it into a separate investment account and draw from it monthly when you are making your lease payments. This way your money is still making money each month until you need to draw from it.
Do I Pay Interest On a Lease?
Yes, your lease’s monthly payment includes interest, this is the money factor.
You can’t shop around for a better interest rate when it comes to a lease without shopping for a different car altogether. You won’t see an interest rate on your contract when leasing a car, but you can request this information from the dealer or leasing company. The total amount of interest paid on a car lease depends on the length of the lease term and even the type of vehicle. If you lease a model that is likely to depreciate faster, the leasing company is more likely to charge higher interest to ensure that loss in value (the residual) is accounted for.
One way to lower your interest rate (Money Factor) on a lease is by placing Multiple Security Deposits if the lender provides the option. Each MSDS equals one monthly payment and will reduce your MF by a percentage point determined by the lender. There is a limit on how many MSDS you can apply, but the savings can be significant in some cases.
Can I Pay For a Car Lease Up Front?
Yes, in most cases customers can pay for a lease up front. Paying for an entire lease at the time of signing is called a one-pay, or single-pay lease. Some lenders will discount interest costs if you pay for the whole lease up front. Make sure to find out if there is any benefit to you before you commit to paying for a car lease up front.
What Are the Pro and Cons of Leasing a Car?
Pros of leasing a car
Risk Mitigation
- When you lease, you transfer to the lender (bank) the risk of accelerated depreciation, diminished value due to damage/accident, and unexpected repair expense.
- Most leases include GAP insurance in the monthly payment. GAP insurance helps pay off your loan if the car is stolen or totaled in an accident.
Convenience:
- Having the most modern platform, technology, and safety features
- You will always be under the powertrain warranty, simplifying your ownership experience.
Flexibility:
- No long-term commitment. It’s easy to exit some leases and get into another type of vehicle if your lifestyle or needs change.
- You have options: turn-in, sell, transfer, buyout, or extend the lease if you need more time finding a replacement.
Financial:
- In some cases, the net total ownership cost is less than financing a purchase. Many shoppers find that leasing requires less cash outflow versus financing the same class of vehicle.
- Your depreciation is fixed so you can pocket any positive equity if the forecasted Residual Value is underestimated by the bank – as those who leased in 2020 experienced due to the appreciation of used car prices today.
Cons of leasing a car
The car isn’t yours.
- It’s a long-term rental: It is a long term rental and other than the use of the vehicle you have nothing to show for the money that you have spent.
- Residuals can work against the consumer: In a normal market, Residuals are typically higher than the vehicle’s fair market value at lease end which means if you buy out your lease at the end you will more than likely be paying too much.
- You’ll never pay it off unless you buy: It is a lease, so it is not yours to pay off. Your only obligation is to make the total payments as stipulated in your lease contract.
Few vehicles will lease well.
- Lease program support (incentives, subsidized money factors, inflated residuals) will vary by manufacturer, model, and trim, limiting the selection of vehicles with an attractive lease payment. OEMs and their captive lending arms will choose specific models to support to offer low lease payments making them more competitive and gain market share. Newly released models or special trims, for example, will lack lease support making their lease costlier.
Fees and costs.
- If your leased vehicle has wear and tear beyond the limits set by the lending company (large scrapes, worn tires, broken windshield, etc.), you will be charged for repairs. Some lenders are known for billing excessive reconditioning fees.
- If you incorrectly estimate your mileage, you will overpay for depreciation. Underestimating your miles and overages (~0.30/mi.) can add up quickly.
- If you decide to turn in your lease, you will have to pay a disposition fee ($300-$595) unless the lender offers to waive it.
- While most lease contracts include a GAP waiver, they require elevated liability coverages, increasing your insurance premiums.
How Can I Save Money Leasing a Car?
Negotiate what you can
The cap cost and money factor are negotiable. You should always try to negotiate the money factor as close to the buy rate as you can get!
Shop around for deals, be flexible
- By shopping for specific models with more automaker or dealer lease support, you’re likely to get a better deal all around. Lease support varies by automaker, model, trim and vehicle inventory. You’ll probably want to stay away from new models and premium trims, which are costlier to lease.
What happens at the end of my car lease?
Deciding what to do at the end of a car lease depends mostly on how you feel about the car. Of course, your financial situation and inclinations also come into play.
These are your options at the end of a car lease:
- Return the car
- Buy the car
- Sell the car (if allowed)
- Move into a new lease
Which option is a good fit for you? If you love the vehicle and can afford to finance or buy it outright, you can keep a vehicle with a good service history at a set price (from the residual on your lease contract).
If you no longer need a vehicle, leasing allows you to simply return the car and keys at the end of the lease term. Remember, leasing is just like a long-term rental.
Stuck on what to do when your lease ends? Check out our guide, “What to Do At the End of a Car Lease.”
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Steering Wheel Optional: In Historic Decision, US Permits Vehicles Without Driver Controls
On March 10, 2022, the United States National Highway Traffic Safety Administration (NHTSA) announced safety standards for vehicles without human controls. The historic announcement effectively eliminates the requirement for human controls in future vehicles designed to be fully autonomous. In a few year’s time, cars without steering wheels may enter production.
“As the driver changes from a person to a machine in vehicles equipped with automated driving systems, the need to keep the humans safe remains the same and must be integrated from the beginning,” said Dr. Steven Cliff, NHTSA’s Deputy Administrator. “With this rule, we ensure that manufacturers put safety first.”
Before the NHTSA rule update, occupant protection standards were written for common, traditional vehicles. You know, the ones with steering wheels. The rule updates the standards to clarify what is required of manufacturers when applying the standards to vehicles without traditional manual controls.
In essence, the rule change permits vehicles to operate without driver controls, as long as automakers continue to provide the same high levels of occupant protection as current passenger vehicles.
GM’s Cruise Origin Spurs Regulatory Updates
The NHTSA’s rule change comes in response to a petition from General Motors’ Cruise division to update the requirements for future self-driving vehicles. The new regulations eliminate the need for manual driving controls (a steering wheel and pedals) in fully-autonomous vehicles. This particular rule pertains to crash safety standards. No steering wheel, no problem.
In February, GM’s petition sought to make the case for NHTSA action.
“This petition both demonstrates how the Origin achieves safety objectives of existing standards, and helps enable future AV regulations. NHTSA has made clear in public testimony and regulatory actions, that in order to consider the development of AV standards, they first need more information from real world AV operations. We believe this petition can help enable that outcome: learnings from the Origin, which is designed to improve overall road safety, can help inform the creation of new, updated regulations and standards.”
GM’s Cruise recently unveiled the Cruise Origin, a purpose-built autonomous pod designed for urban mobility. The Cruise Origin and other autonomous vehicles in development needed the NHTSA to update the rules before embarking on the final stages of development. In fact, most automakers are working on autonomous driving technologies.
When Will Autonomous Driving Come to America?
At least one automaker has refrained from bringing its level 3 autonomy to the United States because of outdated regulations. In 2021, Mercedes-Benz became the first automaker to get regulatory approval for level 3 autonomous driving on European public roads. For now, Mercedes Drive Pilot is available on 8,197 miles of German highways at speeds up to 37 miles per hour. What makes Mercedes Drive Pilot so special is that it is the first approved consumer-ready system to permit the driver to take their attention away from the road while the vehicle is in motion.
Mercedes-Benz cited the murky regulatory environment in America as reason for the delayed rollout of Mercedes Drive Pilot in the US. Now, Mercedes says it intends to bring level 3 Drive Pilot to American roads later in 2022. The S-Class and all-electric Mercedes EQS are the first models to gain Mercedes Drive Pilot in the US.
BMW also hopes to launch Level 3 features on the 7 Series sedan this year.
See every automaker’s plan for autonomous driving here.
Will Tesla Make Cars Without Steering Wheels?
Elon Musk was an early proponent of building cars without driver controls. The updated US regulations will open the pathway for Tesla’s without steering wheels. However engineering autonomy has proven to be a greater challenge than anticipated.
Tesla CEO Elon Musk reflected on the complexity of autonomous driving in a recent interview. “I thought the self-driving problem would be hard, but it’s harder than I thought. I thought it would be very hard, but it was even harder than that.”
That isn’t to say that Tesla is giving up. Tesla remains a leader in automation. The controversially-named ‘Full Self-Driving’ feature is currently available to beta testers with high safety scores. However, criticism abounds from customers who are upset over years of delays for a feature they paid $6,000 to $12,000 for.
Tesla’s vertical integration is one of its greatest strengths. Tesla controls the hardware and software in its cars that will one day support autonomous driving. Little by little, they are making steps in that direction. In 2021, Tesla even eliminated the gear selector in the refreshed Tesla Model S. Apparently, the car should ‘know’ which direction it needs to go. Tesla’s engineers think that today’s Teslas are capable of figuring that out. There are gear selector controls on the touch screen in case the car guesses wrong.
CarEdge’s Take
Still, the 2022 update to NHTSA regulations paves the way for Tesla, GM, Mercedes and other automakers to make their autonomous dreams a reality. If only they can figure out how to get it to work. I don’t expect to see a single production car without a steering wheel until closer to 2030. Commercial ride-sharing ventures like GM’s Cruise could, however, bring vehicles without driver controls to American roads within a few years.
Here Is Every Automaker’s Plan for Autonomous Vehicles
What would it take for you to feel safe buying a vehicle without a steering wheel? Wouldn’t that take the fun out of driving? Perhaps folks like me will be in search of aftermarket steering wheel mods in a decade’s time.
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What Is Bidirectional Charging? Your Questions Answered
Imagine using your vehicle as a backup generator for your home, or even to help a stranded motorist reach their destination. Electric vehicles claim just 5% of new vehicle market share in America, however record gas prices are spurring renewed interest in the EV lifestyle. One of the most sought-after features of electric vehicles is bidirectional charging. Also known as vehicle-to-load, or V2L, tomorrow’s cars literally have the power to do so much more than drive us around. Here’s everything you need to know about bidirectional charging in electric vehicles.
V2G, V2L & V2H: The Types of Bidirectional Charging Capability
During typical use, electric cars draw electricity from the grid, and then consume that energy to power their electric motors. What if you could reverse the flow of electricity back into the grid? Better yet, imagine making money doing it. The future of mobility is about to get weird. Cars are already becoming rolling computers, so it only makes sense that they are capable of revolutionizing the world beyond the driver’s seat.
What is bidirectional charging?
Simply put, bidirectional charging is the ability for electrical current to flow in both directions: from the grid to the vehicle (to charge the battery pack), and also from the car to the grid, another car, or household appliances.
How does bidirectional charging work?
When an electric vehicle is charged, alternating current (AC) from the grid is converted to direct current (DC) using the car’s built-in converter. To send electricity out of the battery pack and back into the grid or into another electronic device, electricity must first convert back to AC. This is done using an inverter. Vehicles that are manufactured with an inverter are already equipped with the hardware needed for bidirectional charging.
The numbers are in: see average EV prices and the latest EV market share update.
Vehicle-to-Grid (V2G)
Vehicle to grid (V2G) capability enables an electric car to return electricity to the grid. V2G can help supply energy at times of peak grid demand. In most of the world, electricity demand peaks during the afternoon and early evening. Peak demand causes demand charges, which are higher rates for usage.
Vehicle to grid capability offers a way around demand charges, to the benefit of consumers and grid operators alike. The vehicle’s owner avoids demand charges or even sells electricity to the grid, and the grid gains a new source of electricity when it’s needed the most.
Although V2G is still in its infancy, the technology opens up the possibility of future revenue streams for everyday EV drivers and even automakers. Imagine if your car could make you money while it’s parked in the garage. Rental and ride-hailing fleets could double the revenue from their autonomous vehicles by serving as power suppliers to the grid. It’s a game changing option that is coming to cars in the near future.
Vehicle-to-Load (V2L)
V2L allows an electric vehicle’s battery pack to power appliances such as power tools, a coffee machine, cooking equipment, laptops, or even a party. More importantly, vehicle-to-load capability serves as the ideal emergency power source during times of need, such as following a natural disaster or power outage. Some cars, such as the 2022 Hyundai IONIQ 5, can output 3.6 kilowatts via V2L functionality. That is a LOT of power, surely enough to power an entire campsite or family-sized outdoor event.
Vehicle-to-Home (V2H)
Naturally, one of the first uses of bidirectional charging that comes to mind is powering one’s home during a power outage. Indeed, vehicle-to-home (V2H) power supply is under development, and it’s even featured in a few of today’s production EVs. It’s important to note that accessories and professional installation of associated hardware are required before any EV can power an entire home. Still, it looks like V2H capability is a real option for EV shoppers to consider in 2022. More on today’s V2H EVs below.
Does Bidirectional Charging Harm the Battery?
The short answer is that it depends on the battery chemistry. One of the latest battery chemistry types to be employed in EVs is lithium-iron-phosphate batteries, or LFP. LFP batteries quickly rose to prominence due to their remarkable ability to withstand the stresses of repeated charging cycles without severe battery degradation.
Other battery chemistries lose range over time as the battery is charged and discharged (referred to as a charging cycle). Even charging to 100% too often can reduce the life of some battery types. LFP batteries are the perfect companion for bidirectional charging, especially vehicle-to-grid. They handle frequent charging and discharging like a champ.
Other battery types in development are engineered with bidirectional charging capability in mind. Ford’s partnership with SK Innovation resulted in a more environmentally-friendly battery chemistry suitable for the frequent charge cycles of bidirectional charging.
Our EV extended warranty provides peace of mind. Batteries and other electrical components are covered! Get a quote for your EV today.
Which Models Have Bidirectional Charging and V2L?
| Max Power Output | Date Available | V2L Capable? | V2H Capable? | V2G Capable in 2022? | |
| Chevrolet Silverado EV | 10.2 kW | 2023 | Yes | Yes | No |
| Ford F-150 Lightning | 9.6 kW | Mid 2022 | Yes | Yes | No |
| Hyundai IONIQ 5 | 3.6 kW | Now | Yes | No | No |
| Genesis GV60 | 3.6 kW | Spring 2022 | Yes | No | No |
| Genesis G80 | 3.6 kW | 2022 | Yes | No | No |
| Kia EV6 | 1.9 kW | Now | Yes | No | No |
| Toyota bZ4X | TBD | Mid 2022 | Yes | No | No |
Does Tesla Have Bidirectional Charging?
For the time being, no Tesla models are capable of bidirectional charging. It’s possible (even likely) that all 2022 Tesla models have the necessary hardware for V2G or V2L, or V2H. However, Tesla has alternative motives for delaying bidirectional charging rollout for as long as possible. If Tesla vehicles became V2H-capable, they would render the $10,500 Tesla Powerwall home battery obsolete!
A few curious Tesla owners have inquired about modifying their cars to become capable of bidirectional charging. The response from Tesla was a warning that doing so would void the vehicle’s battery warranty. So for now, don’t expect Tesla EVs to power your home or appliances.
Ford Intelligent Backup Power: F-150 Lightning
Ford’s F-150 Lightning is widely marketed as the answer to power grid anxieties. Ford Intelligent Backup Power is an available accessory to the popular F-150 Lightning electric truck. With 200,000 reservations in the books, the Lightning is already sold out through 2023.
The F-150 Lightning contains unique battery chemistry that strengthens charging cycle durability while also requiring fewer rare earth metals. Ford’s partner, SK Innovation, has developed a new battery cathode that uses 90% nickel, and 5% each of manganese and cobalt. The new battery chemistry also reduces the harmful environmental and ethical impacts of cobalt mining.
Ford’s engineers designed the new electric F-150 with V2H in mind. In the electric truck segment that’s rapidly gaining steam, automakers are looking for bold ways to make their truck a compelling buy.
“F-150 Lightning with available Ford Intelligent Backup Power can provide power and security during an electrical outage – the first electric truck in the U.S. to offer this capability; in the future, new features will offer additional ways to manage energy use and potentially save on energy costs.”
Ford touts high power output and energy storage capabilities
“The F-150 Lightning extended-range battery system can store 131 kilowatt-hours of energy and deliver up to 9.6 kilowatts of power in a cleaner, quieter, more efficient way versus gasoline-powered generators, and with greater capacity than many wall battery units. F-150 Lightning can also offer lower-cost energy storage in a product customers already own – their truck.”
How long should an electric truck be able to power an entire home? 12 hours? Three days? Ford says that depending on power demand, some homes could be powered for seven days with the F-150 Lightning’s extended range battery.
“With Ford Intelligent Backup Power and the Home Integration System, F-150 Lightning automatically kicks in to power your home if the grid goes down. Once power is restored, the system automatically reverts back to utility power. Based on an average U.S. home at 30 kilowatt-hours of use per day, F-150 Lightning with extended-range battery provides full home power for up to three days, or as long as 10 days when used in conjunction with solar power or rationing.”
Learn more about Ford Intelligent Backup Power in Ford’s official announcement.
The average
CarEdge’s Take
Bidirectional charging is yet another way that the electrification of the auto industry is transforming vehicle ownership. In five years (or less), trucks will be judged for how many days they can power your home, and crossovers will be expected to power household appliances with ease.
The fact that vehicle-to-home capability relies on the professional installation of accessories sold separately seems to fly under the radar for many. While vehicle-to-load may become a standard feature that we all take for granted in a decade’s time, retrofitting a home for V2H power will remain a lofty expense for the foreseeable future.
What do you think about bidirectional charging? Do you plan to power your home with your car in the future? Let us know what you think about automaker’s bold plans for EVs in the comments below, or share your thoughts with the CarEdge Community at caredge.kinsta.cloud.
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Will Soaring Gas Prices Affect Auto Sales? Here’s Who Is Feeling the Worst Pain At the Pump
After surpassing 2008’s record on Monday, gas prices will continue to rise for the foreseeable future. On June 14, the national average reached $5.02 per gallon. The record prices hit some drivers harder than others. With energy experts predicting instability for months to come, what’s on the horizon for auto sales in the United States?
Here’s How Much It Costs to Refuel the 10 Most Popular Vehicles in America
| $4.17/gallon | $4.50/gallon | $5.00/gallon | |
| Ford F-150 (20 mpg) | $108 | $117 | $130 |
| Ram 1500 (22 mpg) | $108 | $117 | $130 |
| Chevrolet Silverado (20 mpg) | $100 | $108 | $120 |
| Toyota RAV4 (30 mpg) | $60 | $65 | $73 |
| Honda CR-V (30 mpg) | $58 | $63 | $70 |
| Toyota Camry (32 mpg) | $67 | $72 | $80 |
| Nissan Rogue (30 mpg) | $60 | $65 | $73 |
| Jeep Grand Cherokee (21 mpg) | $104 | $113 | $125 |
| Toyota Highlander (23 mpg) | $75 | $81 | $90 |
| Honda Civic (34 mpg) | $52 | $56 | $62 |
Electric Vehicle Sales Likely to Spike
At over $5.00/gallon, a larger portion of consumers are likely to turn to electric vehicles to solve their fuel cost woes. Last time gas prices were at record highs, there were no mainstream EVs for sale. In fact, Tesla’s original Roadster (which sold only 2,450 cars) made its debut in 2008. Although charging infrastructure lags behind sales growth, more and more drivers are making the switch.
In 2021, fully-electric and plug-in hybrid models reached 4.8% market share in the United States. It’s fascinating to imagine what would be possible in 2022 if new vehicle inventory was at historically normal levels.
Here’s how much an EV owner driving 1,200 miles a month and charging at home would spend on fuel (electricity). Miles driven and residential electricity rates reflect the US averages.
| Battery (kWh) | Range (miles) | Cost per charge ($) | |
| Tesla Model 3 LR | 82 | 358 | $11.48 |
| Tesla Model Y Dual Motor | 75 | 330 | $10.50 |
| Volkswagen ID.4 | 82 | 260 | $11.48 |
| Hyundai IONIQ 5 | 77 | 303 | $10.78 |
| Ford Mustang Mach-E | 91 | 305 | $12.74 |
| Rivian R1T | 135 | 314 | $18.90 |
Breaking down the fuel cost per mile highlights potential savings even further:
| Range | Fuel Cost ($) | Cost Per Mile ($) | |
| Tesla Model 3 LR | 358 | 11.48 | 0.03 |
| Tesla Model Y Dual Motor | 330 | 10.50 | 0.03 |
| Volkswagen ID.4 | 260 | 11.48 | 0.04 |
| Hyundai IONIQ 5 | 303 | 10.78 | 0.04 |
| Ford Mustang Mach-E | 305 | 12.74 | 0.04 |
| Rivian R1T | 314 | 18.90 | 0.06 |
| Honda CR-V | 420 | 63.00 | 0.15 |
| Toyota RAV4 | 435 | 65.25 | 0.15 |
| Chevrolet Silverado | 480 | 108.00 | 0.23 |
| Ram 1500 | 572 | 117.00 | 0.20 |
| Ford F-150 | 520 | 117.00 | 0.23 |
This comparison includes gas at $4.50/gal and electricity at the average of $0.14/kWh.
How Did Auto Sales Respond In 2008?
Some headlines don’t age well. In 2008, Wired made a bold statement that is laughable in hindsight. “Rising Gas Prices Finally Kill The Once-Mighty SUV,” the title declared. 2008 saw gas prices climb to $4.10 a gallon, a record that stood until yesterday.
In 2008, sales of the Toyota Yaris increased 46%, and the Ford Focus model jumped 32% year-over-year. “It’s easily the most dramatic segment shift I have witnessed in the market in my 31 years here,” George Pipas, chief sales analyst for the Ford Motor Company told the New York Times that year.
Sales of SUVs were down more than 25% in 2008. Sales of the Chevrolet Tahoe fell 35%. Even the industry-leading Ford F-Series saw sales drop 27% month-to-month in mid-2008.
“The era of large SUVs is over,” said Michael Jackson, chief executive of AutoNation, the nation’s largest auto retailer.
As history would have it, gas prices declined back to $2.79/gallon in 2010. Truck and SUV sales climbed back to record levels by 2015. What could be different this time around? There were no attractive alternatives to combustion vehicles a decade ago. Hybrid cars remained compact, weird-looking appliances. Now, plenty of electric vehicles are hitting the market with good looks, and even better fuel savings.
The ongoing chip crisis and looming materials crisis due to the Ukraine conflict continues to bottleneck EV production, but dealers (and Tesla, Lucid and Rivian) are selling their EVs as fast as they can make them. Electric vehicle market share is likely to surpass the 5% mark in the first half of 2022. Will higher gas prices accelerate the adoption of EVs? The answer largely depends on supply. Dozens of EVs are technically available in 2022, but are they really if you have to wait months to take delivery? One-third of American drivers say they are seriously considering one for their next vehicle. The question is, will there be any to buy?
