Electric Car Price Wars Heat Up

General Motors announced on Tuesday it will shave US $5000 off the price of its 2014 Chevrolet Volt, a drop of 13 percent.

The move comes after Nissan cut the price by similar margins for its all-electric Leaf earlier this year, and Ford did the same for its Focus Electric. The Volt could cost as little as $27 495 after federal tax incentives.

The lower costs are due in part to manufacturing efficiencies, Don Johnson, U.S. vice president of Chevrolet sales and service, said in a statement. “We have made great strides in reducing costs as we gain experience with electric vehicles and their components,” he said. “In fact, the Volt has seen an increase in battery range and the addition of creature comforts.”

It may be seen as a pricing war between electric vehicles (EVs), but all of the electric and plug-in hybrids are competing with higher fuel economy internal combustion engines, efficient diesel, and hybrids offerings and steady gas prices just below $4 per gallon in much of the United States.

There are increasing options on the market for EV enthusiasts, but those early adopters are still a niche market. General Motors scaled back its ambitions for the Chevy Volt in 2012. GM sold 23 641 Volts last year, below its initial forecast of 60 000.

For states such as California that have aggressive electric vehicle goals, leasing options have made electric cars more affordable. The Fiat 500e, which is only available in California, is the same lease price as its conventional counterpart.

Many of the drivers looking at electric vehicles were already converts to fuel-efficient driving. General Motors said that the Toyota Prius is vehicle the most frequently traded-in for a Volt.

To move beyond the hybrid lovers, however, prices will have to come down further. That will likely have to come from battery costs, which are the main driver for higher prices in electric cars. Some argue that the key to bringing electric vehicles to the masses is not just improving the cost and efficiency of lithium-ion batteries, but looking at other technologies such as lithium-air batteries

Technology aside, another shift might have to come from how drivers think about lifetime costs of a vehicle. The upfront price tag for electric vehicles are still far higher than their gas-guzzling cousins, but a recent study from Electric Power Research Institute (EPRI) found that the lifetime costs of the Chevy Volt and Nissan Leaf are within 10 percent of those of conventional vehicles for most drivers using today’s gasoline prices. In many scenarios the Leaf didn’t just come close, it was cheaper than conventional vehicles for total cost of ownership.

 

Photo: Gary Cameron/Reuters

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