Electric Car Price Wars — Part 2
Chevy Volt Drops Its Price for 2014
Consumers interested in plug-in cars got more good news this month as the Mercedes-built Smart and Chevy Volt both joined the recent moves to drop prices on their models. The Smart dropped lease prices to $139/month, substantially below much of the competition. General Motors in turn announced the Volt’s price was being lowered by $5000. The actions follow similar moves by Nissan for the Leaf, Honda for its Fit EV and Fiat with the 500e, among others, and the announcement that the all-new BMW i3 electric car would start at $41,350 in the U.S.
That latter price was thought to be the catalyst for the Volt move, although it is very early in the electric car market to be attributing pricing countermoves to automakers. That said, the Smart price drop was clearly a reaction to the $199/month lease prices being promoted by Fiat (for the 500e), GM (for the Spark EV) and Nissan for the Leaf. In the same way the gasoline-powered two-passenger Smart is generally priced below the gasoline versions of those four-passenger competitors (or in the EV-only Leaf’s case, the Nissan Versa), it’s clear that Smart needed to drop its lease price to keep consideration of its Smart ED in the mix.
2013 Smart Electric Drops Lease Price
The Smart ED is the third generation electric car from the Mercedes-Benz sub-brand. It’s substantially improved from earlier versions with stronger performance, but is likely to struggle as its gasoline sibling does since the market for two-passenger cars is limited. Its appeal right now is as the lowest price electric car you can buy. Since most pure electrics are urban-oriented, limited use vehicles (with Tesla’s Model S the pricey exception), the diminutive Smart could yet find a niche. Dealers are reportedly getting additional marketing incentives that could lower prices even more.
Volt Price Drop
They Chevy Volt is in a different place. Since their almost simultaneous introductions, The Volt and Leaf have battled for sales leadership in the plug-in category, though this year the Tesla Model S has been challenging them. Nissan moved Leaf production from Japan to its Nashville, Tenn., plant this year and has started battery production there as well. The moves allowed Nissan to drop the Leaf price by $6,400 this year, which boosted sales by 2-3 times 2012’s level. Nissan also just announced that they have the capacity to increase Leaf production if sales remain strong or improve.
The Volt with its range-extending technology jumped out to an early lead over the pure-electric Leaf in sales last year, but the race has tightened this year with GM offering lease deals on the Volt to keep it competitive with the Leaf. GM claimed the price drop was possible because of manufacturing efficiencies, but it appears that market pressures may have been the prime motivator of the move. Along with the announcement of the $5,000 price drop for the 2014 model, GM also instituted a comparable $5,000 consumer rebate on 2012 and 2012 models that are still on dealer lots.
General Motors has consistently said it doesn’t expect to make any money on its first generation of the Volt, but hopes to change that with increased volumes and reduced costs with the next generation, due in 2015.
Getting the Same Treatment
As we noted in an earlier article, plug-in cars are starting to get the same treatment in the marketplace that conventional vehicles regularly do – garnering incentives and price adjustments based on consumer response to the vehicle. The additional pressure that electric cars face is that at present none of the models on the market are creating profits for the automakers, so incentive money or price drops add to an existing deficit. As is the case with any model, that strategy cannot play out long term.
In the interim consumers have a great opportunity with little risk (particularly in lease offers). Federal and state incentives added to lowered prices and special deals have brought electric cars into the same prices range as not only hybrids, but even regular gas models, particularly when operating costs are factored in. So the bargain choices are as follows (this is for pure electrics; of course, some of the models have limited availability at present) along with some of the variety now offered (most of the initial EVs on the market are subcompact or smaller cars):
Lowest Price: Smart ED, $139/month lease
Lowest Price 4-passenger: Chevy Spark EV, Fiat 500e, Ford Focus EV, Nissan Leaf – all at $199/month lease
Convertible Electric Car: Smart ED Cabriolet
Electric SUV: Toyota RAV4 EV
If you expand your search to include plug-in hybrids such as the Volt, your choices expand significantly with wagons such as the Ford C-Max Energi, midsize cars such as the Ford Fusion Energi or Honda Accord Plug-In or a plug-in version of the best-selling hybrid, the Toyota Prius Plug-In.
And next year the market will expand even more with new plug-in cars from Volkswagen, Mitsubishi, Cadillac, Porsche and Infiniti, among others.
Other similar articles you might find interesting:
Electric Car Price Wars
The Top 10 Electric Cars You Can Buy
Top 10 Best-Selling High-MPG Cars
Electric Cars Are Cleaner Today & Will Only Get Cleaner
Tesla’s next model, labeled X, has been delayed
The headlines are not very positive. Elon Musk of Tesla contesting a negative review in the New York Times and delaying his next car, the Model X. Founder Henrik Fisker leaving his namesake EV company, which hasn’t produced cars for months. EV startup Coda Automotive laying off most of its staff and presumed almost out of business. Nissan Leaf sales declining year-to-year. the Chevy Volt being written off as a failure by many in the media because of failing to meet super-ambitious sales objectives and being seen as a financial drag on the company’s revival.
Overseas China has struggled with its “new energy” vehicles sales, falling short of government goals. The head of GM Europe complains that government representatives have clamored for electric vehicles, but have had a tepid response to the Ampera (the Opel version of the Volt). BMW announced it will offer free conventional vehicles to assuage range anxiety for purchasers of its electric i3 when it’s introduced next year.
While these headlines paint a grim picture for those who see the electrification of the automobile as a critical component for controlling the warming of the planet, the reality of the situation is not quite so negative.
The early market adoption of plug-in vehicles (pure battery electrics and those with internal combustion engines to supplement their electric drivetrain) is actually outpacing the adoption of hybrid vehicles, which after 12 years have become mainstream vehicles in many areas. The Nissan Leaf, the poster child for Nissan’s commitment to electric vehicles, topped 50,000 cumulative sales worldwide last month and is just starting to ramp up vehicle and battery production in the U.S. That shift in production from Japan to the U.S. is expected to help drop prices on the car while the company is also working on extending the range of its battery.
Nissan, as reiterated by its CEO Carlos Ghosn as recently as this last week, remains committed to plug-in vehicles along with its European partner Renault. He indicated he thought China would be where the EV breakthrough would come. China’s goal of having 500,000 “new energy” vehicles (which includes hybrids as well as plug-ins) on the road by 2015, coupled with its centrally planned economy, may overcome the slow start up there. As of the end of 2012 only 23,000 of the new energy vehicles had been sold in the country.
Nissan is not alone, though, as every car company has vehicle electrification as part of their future product strategy. While many auto executives remain somewhere between skeptical and concerned about whether the consumer demand for these vehicles will meet planned production volumes, they are moving ahead with building the vehicles. The move is driven by auto companies’ need to meet American fuel economy standards and European CO2 reduction goals as well as similar moves around the globe.
Joining the Leaf, Volt, Tesla Model S, Toyota Prius Plug-in, Mitsubishi i, Ford C-Max Energi, Ford Focus EV, Ford Fusion Energi, Toyota RAV4 EV, Honda Accord Plug-in, Honda Fit EV, BMW ActiveE, Smart ED, Fisker Karma and Coda on the market will be new models from GM, VW, Fiat, BMW, Audi and Toyota. And others are likely to show up unannounced. Volumes may start low, but most companies are prepared to ramp up as needed.
VW’s Super-high MPG XL1
In addition to the commitment of automakers, analysts following the industry also see the EV trend gaining steam. PwC surveys automotive suppliers as well as manufacturers annually and came to this conclusion:
“Continued investment to improve upon the electric vehicle value chain, along with the pace of advancement in competing alternative fuel solutions, will ultimately determine the level of success EVs are able to achieve, says Brandon Mason, a senior analyst with PwC’s Autofacts group. “While we don’t expect one to be parked in every driveway anytime soon, there is no doubt that EVs are here to stay.”
Autofacts predicts the global market share for EVs will be 6.3 percent in 2020, which may lean heavily on China achieving its cumulative 5 million “new energy” vehicles by that year. In the U.S., President Obama several years ago challenged the auto industry to put 1 million EVs on the road by 2015, but those numbers relied heavily on the clearly over-optimistic Volt, Leaf, Tesla Model S and Ford Focus sales projections as well as contributions from the Think City and Ford Transit Connect (no longer in production) and the Fisker Nina that may never go into production.
The bottom line is that plug-in cars are may not be selling as well as some proponents would like, but they’re also not going away as some detractors might wish. The slow but steady progression towards a more electrified automobile is a path on which the industry is set. The cars will keep coming. They will keep getting better. How soon and in what numbers consumers adopt them is the only part of the equation that is not determined.
By Felix Kramer* and Max Baumhefner
When it comes to consumer products, environmentalists generally don’t encourage people to buy new and buy now. But that’s what we’re about to do because electric cars are significantly cleaner than gasoline vehicles, and driving one can save you serious cash at the pump.
Perhaps you’ve already thought about buying an electric car, but dismissed the idea for one reason or another. Let’s look at some common misconceptions, and offer some good reasons why you might want to reconsider:
“I should drive my current car into the ground.”
“Hold on,” you say to yourself, “I already own a car that gets 25 miles a gallon. I want to get my money’s worth from the investment.” The sooner you start saving gas, the better it is for the planet and your pocketbook. There’s no use in throwing good money after bad at the pump, and the sooner you sell your current car, the less money you’ll lose to depreciation.
“I’d just be switching my pollution from the tailpipe to the power plant.”
If you want to go green, driving on electricity is a clear winner. Using today’s average American electricity mix of natural gas, coal, nuclear, hydro, wind, geothermal, and solar, an electric car emits half the amount of climate-changing carbon pollution per mile as the average new vehicle. In states with cleaner mixes, such as California, it’s only a quarter as much. To find out how clean your electric car would be today, plug your zip code into the EPA’s “Beyond Tailpipe Emissions Calculator.” You should also know that, because old coal plants are increasingly being retired and replaced by cleaner and renewable resources, plug-in cars are the only cars that become cleaner as they age.
“What I save on gas, I’ll pay in electricity.”
On average US residential electricity rates, driving one of today’s electric cars is the equivalent of driving a 27 mile-per-gallon car on buck-a-gallon gasoline. It’s been that way for the last four decades, and is forecasted to stay that way for the next three decades. Experts basically throw up their hands when asked to predict the price of gas next year, let alone 30 years from now. One thing we do know: the price at the pump will jump up and down due to geopolitical events beyond our control. If you’re tired of that rollercoaster, call your local utility to ask about electricity rates designed for plug-in cars.
“I’ll hold off until prices go down and there are more places to charge.”
If you’re thinking you’d be better off waiting for a cheaper, better electric car, and a charging station on every block, consider the following:
- Modern electric cars start well below $30,000. Even better, there’s a federal tax credit worth $7,500, and states like California have rebates of up to $2,500, which mean you can buy an electric car for under $20,000 or lease one at a very attractive price. Still thinking of waiting for a better deal? Those incentives won’t last forever.
- A variety of high-quality electric cars are available today. There are over 80,000 of them on America’s streets, with the Chevy Volt, Nissan Leaf, Toyota Prius Plug-in, and Tesla Model S leading the pack.
- Public charging stations are proliferating rapidly, but you don’t need to wait for them to be as abundant as gas stations. Drivers of plug-in cars enjoy fuel that comes to them, relying on home charging to meet the vast majority of their needs.
“I often need to drive farther than electric vehicles can go without recharging.”
Broadly speaking, electric cars come in two flavors: all-electric and plug-in hybrid. The second has no range limitations whatsoever; they have batteries sufficient for normal trips (between 10 and 40 miles, depending on the model), and they become efficient gasoline hybrids for longer trips. If you want one car to do it all, a plug-in hybrid like the Chevy Volt, Toyota Prius Plug-in, Honda Accord Plug-in, Ford Fusion Energi, or Ford C-Max Energi is a great option.
If, however, your household has more than one vehicle, an all-electric is an ideal “second car” you’ll end up using most of the time. All-electrics, such as the Nissan Leaf, Ford Focus EV, Mitsubishi-i, BMW Active-E, Fiat 500 EV, Coda, Chevy Spark EV, Honda Fit EV, or Tesla Model S, have ranges between 60 and 265 miles, more than enough for the daily commute. When it comes time for the long road trip, you can always take the other car.
When you get behind the wheel of an electric car, you’ll experience the joy of full torque from a standstill and a super-quiet cabin. You may have a hard time going back to a machine that relies exclusively on thousands of explosions of fossil fuel every minute.
If you’d like to try a plug-in outside of a dealership, you can find an owner on DrivingElectric.org to give you a spin. You’ll be surprised in ways you could never expect and you’ll never get tired of driving on a clean fuel for the equivalent of buck-a-gallon gas.
*Felix Kramer is an entrepreneur who founded CalCars.org in 2002 to promote plug-in hybrids and DrivingElectric.org in 2012 to connect curious people with enthusiastic plug-in drivers.
Focus EV Challenges Nissan
(7/16/09) If you are working at Ford, it looks like the downturn in auto sales is ending. In June, sales fell only 11 percent over a year ago. Optimism does not permeate all of Detroit; General Motors sales feel 33 percent for the month; Chrysler, 48 percent. Even Toyota U.S. sales were down 32 percent June over June last year.
Ford is the only one of the Big Three Detroit auto makers that avoided bankruptcy and a federal bailout.
Ford ended June with a 60-day supply of vehicles on hand, down 38 percent from a year ago. Fewer inventories could lead to improved profit margins. Those inventories will shrink with a new “cash for clunkers” program that provides added government discounts of up to $4,500 for trade-in vehicles getting less than 19 mpg. It’s not all rosy, however, with many potential buyers being unable to get an auto loan.
Oil prices have doubled – fuel economy is back in. Ford helps at the pump with new EcoBoost technology and hybrid technology. Ford is the only Detroit maker that was on Clean Fleet Report’s Vehicles with the Lowest Carbon Emissions.
June sales of the company’s hybrid vehicles totaled 3,649, up 91 percent versus a year ago. Ford will extend its current hybrid success with added models. During my recent test-drive of several vehicles that already meet the 2016 CAFE requirements, the midsized Ford Fusion Hybrid demonstrated that you can enjoy fuel economy in a larger car with comfort and safety. The Ford Fusion Hybrid has an EPA certified rating of 41 mpg in the city and 36 mpg on the highway. The car can be driven up to 47 mph in electric mode with no gasoline being consumed. Ford will start selling pure battery electric vehicles next year that will lower its fleet mileage average. CAFÉ
As gas prices increase, the Ford Ranger pickup sales also increased. The model with a 2.3L engine and stick shift gets the best gas mileage of any U.S. pickup at 23 mpg. Ford has the mileage champions in both pickups and SUVs.
The best mileage SUV on the market is the Ford Escape Hybrid with 32 mpg. In 2012, Ford will also offer a plug-in version of the Escape Hybrid that will blow-away the 35.5 mile standard.
The expansion of hybrid, plug-in hybrid, and battery-electric offerings will be helped by Ford recently securing $5.9 billion in federal loans with a lower 5 percent interest rate.
Ford’s first EV will be the new battery-electric Transit Connect vans. These city vans will appeal to green retailers and service companies that make deliveries and follow routes that match the 100 mile range of the electric vans. The vans are made in collaboration with Tanfield’s Smith Electric are now selling in Europe and will start U.S. sales next year.
In 2011 Ford will offer a new battery-electric Focus sedan made in collaboration with Magna International. Now that most U.S. citizens live in urban settings, the idea of a primary or secondary car that never needs gasoline will have growing appeal. Although Nissan will have a head start with thousands of freeway-speed electric vehicles already in use by U.S. customers, Ford could catch-up if it offers the Focus EV for less than $30,000.
The competition will boost revenues for Ford battery supplier Johnson Controls-SAFT; Nissan is in a li-ion JV with NEC.
In 2012, the Ford Escape Hybrid, already the most fuel efficient SUV, will get a lot more efficient by also being available as a plug-in hybrid. The PHEV Escape Hybrid is already being tested in a number of fleets.
“In 10 years, 12 years, you are going to see a major portion of our portfolio move to electric vehicles,” Ford CEO Alan Mulally stated earlier this year. Now Ford is executing its electrification strategy.