Making the shift to EVs is getting more affordable

Electric vehicle ownership is becoming a real possibility for more drivers as cleaner transportation gets more affordable. In 2023, more than 1.4 million electric vehicles, or EVs, were sold in the U.S. — a surge of 50% in one year.

The EV transition may get another boost as the Environmental Protection Agency, or EPA, tightens vehicle emissions standards. The rules for vehicles starting with model year 2027 require vehicle manufacturers to limit the amount of greenhouse gases produced from cars, SUVs, and pickups, and could spur automakers to produce more hybrids and EVs to meet the requirements.

With more than 50 years of auto-lending experience, Wells Fargo understands that some drivers are attracted to EVs primarily due to environmental and financial concerns. The bank works with a network of nearly 10,000 dealerships that financed more than 100,000 EV loans nationwide last year.

EV education is a two-way street

Since 2021, in collaboration with plug-in vehicle advocacy group Plug In America (PIA), Wells Fargo has been raising awareness and educating consumers about the benefits of EV ownership through community events. These interactions give drivers an opportunity to get behind the wheel of an EV and get expert answers to their questions.

PIA also gathers reactions from EV owners and potential owners. The nonprofit conducts a survey each year to understand the state of mind among EV drivers. The most recent survey shows high satisfaction among owners, with 90% of participants likely to purchase another EV as their next vehicle.

Lower sales prices can steer new drivers to EVs

The purchase price of EVs is going down. From February 2023 to February 2024, EV prices fell 12.8%, with an average price of $52,314. However, EVs are still more expensive than comparable gas-powered vehicles.

A Gallup poll found American households with annual incomes of $100,000 and over are more likely to purchase an EV than lower income groups. PIA says this trend is driven by two main factors — the modest number of used EVs on the market and limited access to low-cost home charging. More than 45% of EV owners consider inexpensive charging options before purchase.

While PIA’s EV driver survey found early adopters tend to skew toward higher income brackets, there is a growing recognition of the need to make EVs accessible to a broader range of consumers. In addition to providing access to financing for EVs, Wells Fargo works with dealers in their network and the Military Warriors Support Foundation to award veterans with payment-free EVs or hybrids through their veteran vehicle donation program.

EV owners can save money up front and down the road

Incentives in the Inflation Reduction Act, or IRA, can help address affordability challenges. The IRA tax credits for qualifying vehicles and home energy improvements aim to make EV ownership more accessible to consumers.

Dealers can offer qualifying EV tax credit savings to consumers at the point of sale to reduce the sales price by the credit amount. This can allow buyers to see savings of up to $7,500 instantly, rather than waiting until filing their tax returns. Many states also offer additional rebates and tax deductions. The rules for claiming EV tax credits changed for 2024, so drivers should review which vehicles qualify.

The upfront cost is not the only financial factor. PIA found nearly 20% of owners consider the potential cost savings associated with fuel and maintenance. The U.S. Department of Energy calculates fuel costs for an internal combustion engine vehicle at $945 a year ($3.06/gallon) compared to $525 a year for an EV ($0.16/kWh).

EV ownership can be an investment in sustainability and personal financial health due to potential savings on annual vehicle expenses. Wells Fargo’s industry-leading experience supports customers who want to purchase EVs while possibly tapping into lower sales prices due to tax incentives and long-term fuel savings.