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EVs, Hybrids and Gas: Your Guide to the Latest on Cars

Changes around tax rebates, emissions are altering the auto market


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Remember the days when the biggest decision you had to make about a car purchase was whether you wanted front- or rear-wheel drive? Things have changed a lot.

For well over 100 years, personal transportation in the U.S. has been dominated by gas-powered vehicles. But the market is evolving quickly, thanks to the popularity of some electric vehicles (EVs) — and a very big government effort to reduce greenhouse gas emissions and build out a nationwide charging infrastructure.

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The U.S. Environmental Protection Agency (EPA) has predicted that by 2032 nearly 70 percent of auto sales will be of all-electric vehicles. Some analysts expect to see market gains even earlier with up to 50 percent of all cars sold being EVs by 2027, according to a white paper published this year by the International Council on Clean Transportation. That would be a huge leap, as EVs made up just 5.8 percent of the market in 2022, according to Cox Automotive, an automotive services company.

One of the reasons for this predicted surge is a new set of proposed EPA guidelines around emissions of certain pollutants and CO₂. The proposed requirements would encourage automakers to sell a large number of zero-emission vehicles by 2027 in order to meet emissions targets.

Here’s a helpful guide to the automobile buying landscape — whether you’re looking at an EV, a hybrid or a traditional model — and what you can expect to see in the future.

The EV market

Rebates and tax credits: Potential emissions restrictions aren’t the only thing impacting purchasing. A $7,500 federal tax rebate for some EVs has been extended, but there are lots of restrictions and not all EVs will be eligible for the rebate — those assembled outside the U.S., for example, generally don’t qualify. Vehicles that do qualify must be made using certain minerals for their batteries and a set number of components that are domestically sourced.

However, car companies whose vehicles don’t currently meet the requirements are making moves to meet the U.S. government’s rules. Korea-based Hyundai, for example, recently announced plans to open a $5 billion battery plant in Georgia to meet the domestic battery sourcing requirements of the bill.

Consumers must also meet basic criteria to get a tax credit on EV purchases. A couple’s adjusted gross income can’t exceed $300,000 or $150,000 for individual buyers. In addition, only SUVs under $80,000 and cars under $55,000 qualify, and they must be built in North America. Because the rules and status of vehicles are constantly changing, either check out the EPA’s page on which models currently qualify or see Edmund’s page with similar information.

Pricing: So what does all this mean for purchasing costs? Different things, says Bob Gritzinger, editor-in-chief of WardsAuto.com, an industry research and analyst firm.

“The proposed standards don’t assure that EV prices will come down. But advances in battery chemistry and technology, along with a significant increase in the number and volume of new EV models on the market, should bring astronomically high EV prices down to earth,” he says

Some prices have already dropped on particular models, such as Ford’s Mach-E and Tesla’s Model 3, largely due to competition. On the other hand, models that are in high demand have seen substantial price increases, says Gritzinger, such as the Ford F-150 Lightning, which is up more than $10,000. He expects such prices to hold until other electric pickups, such as General Motors’ Chevrolet Silverado EV and Stellantis’ Ram 1500 REV, enter the market.

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When comparing prices and rebates, EV buyers should also take into account that electric cars are less expensive to own. Between fuel and maintenance costs, the EPA estimates that the average consumer who buys an electric sedan or SUV will save $9,000 over eight years compared to owning a comparable gas guzzler. An electric pickup truck owner could save $13,000 over the same period.

Charging: For now, there is a charging plug standard for North America based on the Combined Charging System (CCS) but Tesla has been promoting its own plug system and has recently won converts, creating some confusion. Ford, GM and Rivian have all promised to offer adapters to make their vehicles work with most of Tesla’s public charging stations (although some older, slower charging stations may not work). Starting in 2025, some manufacturers plan to make their vehicles compatible with Tesla stations without an adapter — although how they will also accommodate the CCS systems after that is unclear.

Hybrids are hanging in there

“We are surprised hybrids and plug-in hybrids are not a larger part of the overall clean air conversation,” says Brian Moody, executive editor of Autotrader and Kelley Blue Book. “I personally drove a plug-in hybrid and got 80 miles per gallon.”

Rather than relying solely on electric motors and a large battery, hybrids typically use smaller gas-powered engines as well as battery power. There are two basic types of hybrids: those that mainly rely on the gas engine and recharge the car’s supplementary battery while driving, and so-called plug-in hybrids that can run under pure electric power for short distances and can be plugged in at night to recharge.

Hybrids are inherently more complex and less fuel efficient than EVs because they have to haul around the heavy gas engine and transmission, so most automakers are switching to pure electrics while the carmakers offering hybrids are those that committed to making them years ago.

Battery power: The main advantage that hybrids offer over EVs is that there’s no “range anxiety.” If the battery runs out of juice, you can continue driving under gas power. So with a hybrid, you don’t have to worry about finding public charging stations, particularly on long trips.

“Hybrids, both with and without a plug, can be a compelling proposition for many consumers,” says Paul Waatti, manager of industry analysis at research firm AutoPacific. “They offer more flexibility and don’t require major lifestyle and behavior changes from living” with a gas-powered vehicle.

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Ratings: The automakers offering hybrid options are those that committed to making them years ago. That said, Consumer Reports’ latest annual ranking of the top 10 vehicles in the U.S. included several hybrids, including the Toyota Camry Hybrid sedan and the Hyundai Santa Fe Hybrid SUV. In fact, Jake Fisher, Consumer Reports’ senior director of auto testing, noted that some hybrids are more reliable than their gas-only counterparts.

Traditional vehicles remain in the mix

So are gas-powered cars and trucks running on fumes? Not quite. Models with traditional internal combustion engines, or ICE, are still riding high.

Data from auto intelligence company WardsAuto.com “forecasts that, by the end of the decade, nearly 70 percent of all light vehicles will still come with an internal-combustion engine, including pure ICEs and hybrids,” says Gritzinger.

More of these gas-powered vehicles are designed with very specific target audiences in mind. For example, Ford just introduced the company’s most advanced and powerful gas powered Mustang yet, the 2024 Dark Horse. It boasts a roaring 5-liter V8 engine with 500 horsepower and an old-school 6-speed manual transmission. And brawny ICE pickups, like the 2023 Ford F-150 can still tow more — up to 14,000 pounds — than their electric counterparts, like the 2023 Ford Lightning F-150, which has a maximum towing capacity of 10,000 pounds.

Pricing: Most of the pandemic worries about supply chain issues and excessive demand have resolved. For the first time in two years, ICE prices have started to fall, according to Kelley Blue Book. After 20 months of increases, the average price paid for a new vehicle fell below the manufacturer’s suggested retail price (MSRP) by about $170. Researchers at Kelley believe it will be a continuing trend, but maybe not for long.

“The new EPA standards will not necessarily result in less expensive electric cars,” says Autotrader’s Moody, but “it will, more likely, result in more expensive gas and hybrid vehicles, as automakers will have to spend a considerable amount of time and money making gasoline engine improvements” to meet the new proposed regulations. So the best time to buy a gas-powered vehicle may be sooner rather than later.

Availability: At some point, manufacturers will decide that research and development dollars are better spent on designing better EVs than shoring up combustion engine cars. Indeed, nearly all analysts agree that the days of gas-powered cars are numbered. By 2050, says Gritzinger, “ICE-powered vehicles may become similar to today’s muscle cars: blasts from the past that only come out for special occasions, track days, parades and car shows.”

The Bottom Line

Your decision about what type of car to buy now boils down to what your main goal is. If you want to eliminate climate-changing pollutants and lower your maintenance costs, go fully electric. However, if you’re really only concerned about fuel economy, then a hybrid is a good choice. And finally, if you’re towing and hauling a lot of gear on a regular basis, you should probably stick with a traditional gas-powered pickup for now. Oh, and you’ll still have to choose between front-wheel, rear-wheel and all-wheel drive.

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