February 2024

There is a big push for electric vehicles these days, but what really makes the most economic sense for my bank account?  I currently drive an F150 to serve my Colorado Lifestyle, so let’s explore a Service Evaluation comparing the F-150 Lightning Lariat (EV) to the gas-powered Lariat, and determine which one would be the most cost effective for my next F150 purchase.  

 

For the sake of simplicity, I’ve made a few assumptions that may differ from your own economic model.  I’ve assumed that I could charge my EV at home and already have a charger.  The MSRP of each vehicle was acquired from Ford.com, and all registration and licensing, insurance, dealer fees and upkeep costs are the same for both vehicles.  I drive 30,000 miles per year; regular, unleaded gasoline costs $2.11 per gallon (the price at the pump when I last filled up…) and electricity costs are 15 cents per kWh on average in Colorado.

I don’t care to purchase cars very often, so I’ve built my model over a ten-year period and calculated the salvage value of each car to be 50% of the original purchase price.  After discounting all the costs back to time period zero at a minimum Rate of Return of 10%, the resulting Present Worth Costs are:

 

• F 150 Lighting Lariat........$69,995

• F150 Lariat........................$63,071 *Economic Choice

 

In the scenario I’ve evaluated, the F150 Gas Lariat proves to be the most economical choice for my next truck.  But, where would we be if we factored in tax credits?  A Federal tax credit might be available if I buy the electric vehicle.  There are many factors which could limit my ability to receive the tax credit, such as my income, the vehicle weight and MSRP, where the critical minerals were processed, and where the battery components were assembled, to name just a few.  If you met all of the requirements, and you pay at least $7,500 in Federal taxes (IRS Link), you could receive a $7,500 tax credit from the Federal government in 2024. This brings our Present Worth Cost of the Lightning Lariat to $62,495, just slightly less than the gas-powered Lariat.  Some states like Colorado also provide a state tax benefit.  Colorado currently offers a $5,000 tax credit with similar provisions as the Federal credit, with the added benefit of assigning the credit to the dealership, delivering instant savings to you upon your vehicle purchase.

 

Economic evaluations such as this one are vital to the success of your business and financial well-being. If you haven’t already taken our course, Economic Evaluation & Investment Decision Methods,  and would like to learn more, view our course description here on our website or contact us for more information. 

​