Should I get electric car now or wait

Is now the right time to buy an electric car? We can help you decide

EVs are currently stillsignificantly more expensive to buy than their petrol and diesel-engined counterparts. However, with sales of EVspredicted to increase exponentially over the next few years, andbattery technology improving, prices should start to come down.

This should also help with the cost of insurance, which also trends to be higher for electric cars right now, because insurance groupsare based partly on a cars purchase price, and the likely cost of replacement parts.

Servicing an EV should be cheaper than a petrol or diesel, however,because there are fewer mechanical parts. Just bear in mind that EVs can wear out brakes more quickly due to their higher weight, and some sit on specially designed tyres that can be pricier to replace, so youll need to ensure you can afford these additional expenses.

On the other hand, if you're a company car driver, choosing an EV is a no-brainer, because you'll pay benefit-in-kind tax at a rate of just2%

Weve had a small number of reports from owners about electrical issues with EVs. One reader told us his Kia e-Niro has a problem with its heater that means he cant use the car until a replacement part is sourced from abroad. Another said his Volkswagen ID 3 had suffered multiple software glitches. However, our annual What Car? Reliability Survey suggests EVs are mostly pretty dependable.

Electric cars can certainly make sense now, then, but you might also want to consider a PHEV or a hybrid carnext, then go electric in a couple of years.Our 2023 Plug-in Hybrid of the Yearis the Lexus NX, whichhas anelectric range of more than 40 miles.

Is now the right time to switch to a fully electric car?

Should I buy an electric car now, or wait?

A: It is entirely feasible to purchase an electric vehicle right now, but the decision will likely depend on your budget, and how much importance you place on moving away from fossil-fuel-powered cars sooner rather than later.

The future of motor transport, whether you like it or not, is one of electric-powered silence rather than noisily exploding fossil fuels, which are, fittingly, going to go the way of the dinosaur.

Read more about electric cars

The rise in popularity of electric vehicles over the last few years is undeniable: sales of EVs hit 6.6 million globally in 2021. Thats a mere 9 per cent of the total global market, sure, but its also a figure thats triple that of two years earlier, pointing to an explosion in electric-powered-vehicle popularity.

Two million EVs have already been sold globally in the first quarter of 2021 - up 75 per cent from the same period last year - and its projected that battery-electric vehicle sales will reach 25.3 million by 2030, although some predictions place that figure even higher.

The rise in popularity of electric vehicles over the last few years is undeniable.

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If youre considering buying an EV, its likely that a lot of questions are swirling around your brain: Should I buy an electric car? Should I buy or lease an electric car? Should I buy an electric car or hybrid?

Buckle up as we attempt to address all of your questions below

Is now the right time to buy an electric car?

Most people might really like the idea of a new electric car, but not especially enjoy the price tags that come along with them.

To give you an idea of what youll need in your piggy bank before you take one home, currently the two cheapest EVs in Australia are the MG ZS EV Excite mid-size SUVfor $44,990 plus on-road costs, and the Atto 3, a new player in the market from Chinese manufacturer BYD, which also goes for $44,990 plus on-road costs (prices vary from state to state for the latter, though, and its more expensive in certain states).

Both EVs come with an estimated 320km of driving range, although the Atto 3 has an extended-range model with 400km of range.

The MG ZS EV Exciteis currently one of the cheapest EVs in Australia, starting at $44,990 plus on-road costs.

Will costs come down in the future?

In short: yes, but it will all depend on when the cost of batteries drops.

Currently, EV batteries account for a whopping 30 to 35 per cent of an EVs total cost, so EV prices dropping has a lot to do with the price of batteries going down.

Battery production costs will fall below $US100/kWhby 2025, according to some financial analysts, a figure that means EVs will cost about the same to produce as ICE vehicles.

Accordingly, its predicted that shorter-range EVs will reach price parity with ICE cars between 2024 and 2026, and between 2027 and 2030 for EVs with longer range.

Currently, EV batteries account for a whopping 30 to 35 per cent of an EVs total cost.

What new models might be worth holding out for?

BYD, which specialises in budget EVs, plans on unveiling five new EVs in Australia over the next two years.

Also, 2023 will see the arrival of the Cupra Born hot hatch, followed by the Volkswagen ID.3 electric hatchbackin 2024; both models will likely cost somewhere between $50,000 and $65,000.

How long are wait times?

If you decide you do want to purchase yourself an EV, be aware that some models come with significant wait times, due to high demand.

Expect to wait between six to 12 months for BMWs iX, iX3 and i4, up to six months for a Polestar 2 and seven to 10 months for a Tesla Model 3 or Model Y.

BYD plans on unveiling five new EVs in Australia over the next two years. (Image: Sam Rawlings)

What about leasing?

If youre concerned about locking yourself into an expensive EV that may be out of date sooner than youd like, leasing is always an option. It typically covers things like maintenance, servicing, tyres, annual registration and insurance, too, giving you less to worry about although it is worth noting that leasing can be comparatively expensive.

New vs second hand?

EVs are relatively new to the automotive marketplace, which means the second-hand market isnt exactly flooded with pre-loved electric cars. Still, there are some available, and considering EVs have little in the way of moving parts or maintenance needs, the only thing you really need to worry about is what kind of shape the EVs battery is in, and if it can still capably hold a decent amount of charge.

Is it better to go hybrid right now in Australia?

If youre worried about the current lack of EV chargers in Australia or expect youll be making a lot of long-distance trips, a hybrid might be a good option for you. In most hybrids you can drive in all-electric mode, but theres also a petrol-powered ICE on hand to cover you if your EV battery runs out of charge.

Next year is a good time to buy an EV but for many consumers, 2024 might be better

Car buyers are watching the clock tick down for the Inflation Reduction Acts updated electric vehicle tax incentives to kick in. The changes, which take effect next month, are likely to put EVs within closer reach for more consumers, experts say, but those with tighter budgets might benefit by holding off a bit longer.

If you are ready to buy an EV that currently qualifies for the EV tax credit, jump on it, said Jay Turner, an environmental studies professor at Wellesley College and author of Charged: A History of Batteries and Lessons for a Clean Energy Future. Things get a lot more complicated next year.

Among other provisions, the IRA includes limits on income and vehicle price that determine whether consumers get $7,500, $3,750 or $0 to put toward an electric vehicle. For example, a qualifying buyers modified adjusted gross income must not exceed $150,000 (or $300,000 for couples), and a new EV purchase must not exceed $80,000 for SUVs or $55,000 for sedans.

Thus far, said Tyson Jominy, vice president of data and analytics at J.D. Power, the EV space has been dominated by a lot of wealthy consumers, very high-end vehicles. Part of the goal is to get down to middle-class levels.

But the new law isnt just trying to boost EVs appeal to get more drivers to go electric. Its also trying to rev up the nations domestic EV production to boost made-in-USA inventories. As the legislation tries to balance both objectives by gradually phasing in multiple policies, the outlook can get confusing. Heres an overview of what to expect, depending partly on your budget.

If you shop right now

State and federal EV incentives already exist. And when the IRA takes effect on Jan. 1, 2023, some existing policies will change. One addition: To receive the full federal tax credit, an EV must be assembled in North America and contain more components sourced there as well as more battery minerals derived on the continent or from a U.S. trade partner.

Abigail Bilbrey and her husband, Scott Wilson, recently bought a Nissan Leaf, before those restrictions kick in. The Boston-area couple, who make under $100,000 combined, said the existing set of tax credits on offer sealed the deal for them. Their car was built in Tennessee and qualified for the full $7,500 federal tax credit, which they were able to combine with a Massachusetts EV tax exemption of $2,500, effectively knocking $10,000 off the price.

It was the EV that was the most efficient in terms of costs, so thats what won us out, Bilbrey said.

But so far, EV supplies remain limited, and there are waiting lists for some popular models. Plus, caps on how many vehicles can qualify for existing tax incentives have kept some buyers on the sidelines. Those limits go away next year, which may make it a good time to take a fresh look at the market.

If you shop in 2023

The federal cap allowing only 200,000 EVs per manufacturer to qualify for tax relief remains in place through this month. After those curbs lift in January, maxed-out automakers like Tesla and GM can qualify for the incentives. However, the North America production restrictions also kick in and gradually increase each year after that. At the same time, the law expands incentives to include fuel cell EVs, and used EVs will for the first time be eligible for a federal one-time tax credit of up to $4,000.

Analysts expect the complicated push-and-pull of these policies to produce a somewhat more accessible market that still generally favors buyers with more money to spend. And incentives notwithstanding, inflation and supply chain woes are continuing to goose car values: The average price of a new EV is $65,041, according to Kelley Blue Book, and Cox Automotive estimates current prices at roughly 9% higher than a year ago.

While some major automakers, including Hyundai, Kia and Honda, have announced plans to ramp up U.S. manufacturing so they can offer more incentive-qualifying vehicles, its not yet clear which automakers will be able to offer the full $7,500 credit.

If you wouldnt do it without a tax credit, Im not sure thats the reason to do it under the new incentive structure, said Stephanie Brinley, associate director of research and analysis at S&P Global. But, she said, if youre talking about somebody whos buying a $45,000 car and they can get enough for the credit, it can help.

The credit for used EVs comes with a lot of fine print: An individuals modified adjusted gross income cant exceed $75,000, and the vehicle must be at least two model-years old. Jessica Caldwell, executive director of insights at Edmunds, said a $25,000 price cap for used EVs further limits selection. Right now, shes advising buyers to hold out for higher-quality inventory.

The cap for used EVs is so low that were just not there from a pricing standpoint, she said.

If you shop in 2024

After next year, the IRA makes an important change to how consumers apply their tax credit. Rather than having to wait to file their taxes to receive it, buyers will be able to cash in directly at dealerships. For many shoppers, that alone might be worth the wait.

Some consumers at lower income brackets may not have enough tax to offset, and they may say, Well, wait a minute, I thought I was supposed to get more money here, Jominy said. With point of sale, that wont be an issue. Bilbrey and Wilson, by contrast, wont get their credit until next year.

By 2024, industry experts say the EV market will probably look a bit different for other reasons, too. For example, while many auto executives and consumers have complained about the IRAs North America-focused battery requirements and regulators are actively seeking feedback that could result in changes its provisions are still expected to broaden the selection of EVs in the not-so-long term.

Thats good news for those with tighter budgets, Caldwell said. While its a gamble whether a given EV will have met the IRAs manufacturing standards by 2024, waiting a year is probably going to be more helpful, just from an availability standpoint, which translates into a pricing standpoint, she said. In October, GM CEO Mary Barra told analysts it would be two to three years before the company which makes the Chevy Bolt, among the cheapest new EVs on the market at $25,600 can offer buyers the full $7,500 credit.

Industry insiders are also betting that other pricing pressures, including the microchip shortage and high interest rates, will have abated somewhat by then, too. As Wellesleys Jay Turner sees it, the new law is messy but seems poised to make EVs more affordable eventually.

Long term, the IRA provisions will likely improve accessibility, he said, but itll be a bumpy road getting there.