GM announced on August 6 that it will reduce the price of the 2014 model Chevrolet Volt by $5,000 from the 2013 model. After the price cut, the Volt will be under $35,000, and after the federal tax credit, under $27,500. The price cut on the Volt has been expected for some time, following a similar reduction on the Nissan LEAF and multiple mass market PEV introductions in recent months with price points far below the 2013 Volt MSRP. These moves have sparked what has been termed an “electric vehicle price war” in a market that has been relatively stagnant over the last seven months.
Nissan LEAF slashed the price of the LEAF by $6,400 in early 2013, and the slow-selling Ford Focus Electric was reduced by $4,000 last month. The price cut sparked demand for the LEAF in the U.S. considerably: average monthly sales have increased from just under 800 for 2012 and the first two months of 2013 to more than 2,000 since March – or roughly the monthly average for Volt sales over the last 12 months. As a result, the Volt has shed PEV market share, going from just over 43% in 2012 to under 25% so far in 2013.
The growing list of available PEV options, including the Tesla Model S, Ford C-MAX Energi, Ford Fusion Energi, and the Smart ForTwo ED, as well as discounted lease deals on PEVs from Mitsubishi, Honda, and FIAT, has also begun to eat into the Volt’s supremacy in the U.S. market. Monthly sales of the Volt, which reached more than 2,500 at the end of 2012, have only broken 2,000 once in the last 7 months. Adding to the mix, the Mitsubishi Outlander PHEV, and the highly anticipated BMW i3 are expected to be introduced in early 2014.
As Cheap as Gas
While the market has grown significantly more competitive in 2013, it has not expanded much. Since total PEV sales reached the 8,000/month mark in December of 2012, monthly figures have averaged just below 7,000. This does not mean the market is smaller; annual 2013 sales will likely surpass 2012 sales this month. But it does mean that the market is not growing as fast, even as new models are being introduced.
To garner greater shares of the market, PEV makers are differentiating themselves in a variety of ways. The most common method has been to offer reduced prices and/or discount lease deals; many automakers, though, are branching out by offering free rentals of longer-ranged gas powered vehicles for road trips, battery leasing options, and free charging services. Significantly lower PEV ownership costs should help expand the overall market.
The Volt is the most popular PEV in the U.S. with over 43,000 cumulative sales to date. The price cut puts the vehicle on par with gas powered counterparts in terms of total cost of ownership, and is likely to not only increase the vehicle’s PEV market share, but convert a significant amount of hybrid and conventional gas-powered vehicle owners. Bargain prices from other PEV makers, such as Ford, are likely to follow soon.
Tags: Chevrolet Volt, Clean Transportation, Electric Vehicles, Smart Transportation Program
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