By David Bluestein
Electric vehicles are better for the environment and save drivers money in the long run. The federal tax credit for EVs expires September 30, 2025.
For over a century, the automobile industry has been an essential part of the US economy. Most of the country’s cities and towns are built around the idea that people have access to cars. In Vermont nearly 40% of our carbon emissions come from the transportation sector.
The most common vehicle today is the Internal Combustion Engine, or ICE vehicle. However, there are now many more efficient options, including: hybrid electric vehicles (aka hybrids or HEVs), plug-in hybrid electric vehicles (aka plug-in hybrids or PHEVs), and battery electric vehicles (aka electric vehicles, BEVs, or EVs). If you have been interested in making the switch to an electric vehicle or plug-in electric hybrid, now is the time to act, as the federal tax credit of up to $7,500 expires September 30th, 2025. If you’re curious about the benefits of various options, read on.
Electric Vehicles
While Electric Vehicles (EVs) emit a larger amount of carbon during their production, they are still considered more environmentally friendly overall. For more information on that aspect, check out this article from Drive Electric Vermont. Part of the growing popularity of EVs has been due to a tax credit from the federal government that helped people buying EVs save up to $7,500. The Big Beautiful Bill that was recently passed will end that tax credit on September 30th, 2025, so time is of the essence for anyone considering getting an EV who wants that tax credit. Even without the tax credit, EVs will still save you money in the long run, as this article from CBS points out.
Hybrid Vehicles
While EVs are great, they typically still cost more than ICE vehicles upfront, and not everyone wants an EV with the current range and charging limitations. Hybrids have been growing in popularity since the early 2000’s and are still a great way to improve the efficiency of a vehicle (usually by around 30-50%). Since they involve a small battery and an electric motor in addition to everything in an ICE vehicle, they tend to be slightly more expensive. With a slightly higher upfront cost, most hybrids will make up the difference by saving money over the lifetime of the car because it will need less gas. For example, driving a Toyota Rav4 Hybrid for about 66k miles will save you the $1,650 that it cost to get the hybrid instead of the ICE. Assuming you drive more than that during the lifetime of the car, you end up saving even more money on gas as you keep driving it.
Plug-In Hybrid Vehicles
In many ways, PHEVs offer the best of both worlds for people who want a more efficient vehicle but aren’t ready for an EV. PHEVs have slightly larger batteries than regular hybrids, but not as large as those in EVs. As a result, they are often less expensive than EVs, but a little more expensive than hybrids, though many also qualify for the EV tax credits until the end of September. At the same time, PHEVs can save even more on fuel costs than hybrids because they can usually operate as if they were EVs for a limited number of miles (when charged). Essentially, you can plug one in and charge the battery, then drive it for some number of miles (ranging from about 10 to 80) on electricity only. Once it gets low on charge, the engine kicks in and it essentially operates just like a regular hybrid vehicle, using the battery to help but primarily relying on gas. This makes them great for daily commutes in electric only mode but still allows for longer drives or road trips with ease and convenience in hybrid mode.
EVs, hybrids, and PHEVs are all helpful when it comes to reducing emissions. The specifics of pricing can get complicated quickly, but between tax incentives and money saved on fuel, all three can be worth the extra upfront cost. If you want to qualify for the EV tax incentive of up to $7,500, purchase your vehicle as soon as possible before it expires on September 30th, 2025.