03 October 2013

Electric and Hybrid Cars Face Pricing Crisis

As mainstream automakers slash their prices on hybrids and electric vehicles (EVs), luxury car makers and upstarts are getting their feet into the market. If you've been waiting to buy, now might be the time - even as EVs become playthings for the well-heeled.

Big Price Drops Mean Low Demand

Automakers may be slashing prices on EVs to counter consumer concerns about high cost and uncertain driving ranges. Nissan and Chevy have announced big price reductions recently for the all-electric Leaf and plug-in hybrid Volt . At new starting prices of $28,800 and $34,185 respectively, these high-tech cars are almost competing at regular car price ranges

Lease deals on electrics and hybrids are getting interesting too, according to FiatUSA and U.S. News.
  • The Honda Fit EV leases for $259 /month with only $259 due at signing.
  • A Chevrolet Spark EV leases for $199 a month with $999 at signing.
  • The Fiat 500e leases for $199 per month with $999 at signing.

Electric and plug-in hybrid vehicles accounted for less than 1 percent of all U.S. light vehicle sales in July 2013. Maybe it's more than just range anxiety driving demand down.

At least one analyst with automotive expert group, R.L. Polk & Co., thinks increasing fuel economy across the entire range of vehicles suggests that “demand for electric cars will continue to remain weak.” He also adds the fact that gas prices are topping out at $3.75 a gallon rather than shooting up further, according to USNews.RankingsandReviews.com. Plug-in vehicles depreciated by 31.5 percent in 2012, more than double the rate of similar gas-electric hybrids and regular cars, adding to buyer concern, according to FiatUSA.

The Chevy Volt Was Supposed to Rock the World

Technical darling, savior of the planet, and the much-ballyhooed Chevy Volt was most certainly going to rock our world when it came out in 2011. But take a look at Volt sales:
  • 7,671 in 2011
  • 23,461 in 2012
  • 6,300 through July 2013

The bulk of these sales were to municipalities or General Electric, who'd promised GM they'd buy a bunch of them.

Video: Tesla Model S Luxury Electric Car

A $5,000 manufacturer rebate, added to a price drop of $5,000, and the $7,500 federal tax credit cuts the $41,000 Volt price almost in half, according to CNBC. That surely pumped up sales:
  • 3,351 Volts sold in August
  • 18.4 percent increase over August 2012
  • beating the car's previous best (October 2012 with 2,961)
Year to-date 2013 GM has placed 14,994 Volts, according to The Blaze, which is 11.1 percent more than the same time in 2012.

EVs are Going Luxury

Maybe the masses just can't afford EVs, even with Federal tax rebates. Is that why they're becoming playthings for the rich? Take the $100,000 Tesla S, which according to NPR, sold 4,714 cars in California year-to-date, more than luxury makers Buick, Jaguar, Land Rover, Lincoln, Porsche, or Volvo. Shoot, this luxury EV even outsold Fiat and Mitsubishi in The Golden State.

The fastest, super-exotic sports cars from Ferrari, Porsche, and (soon-to-be) Jaguar are all electric hybrid. Luxury German automakers BMW and Audi are both coming out with full lines of electric cars, as FiatUSA mentions. Maybe EVs are just not for ordinary people any more. Only glitterati need apply?

The next time you visit a major dealership location, Drivetime used cars lot, or local mom and pop auto dealer, don't be afraid to consider hybrid and plug-in EVs. Just look for the SmartWay Leaf on the glass.


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Author: Tommy Calloway
Tommy is a writer and car enthusiast from California who loves tinkering with his old Chevy and working as a part-time mechanic.