Electric vehicle makers resort to price war to boost sales

Article by Anita Panait, on June 3, 2013

One of the major reasons why consumers are discouraged from purchasing electric vehicles is its quite high price. To boost sales, electric car makers are now discounting their products – leading to a so-called price-war. With lower EV prices, carmakers could now access a wider market to include those who may want to adopt the technology but does not have enough money to do so. With this strategy, some carmakers actually made success.

For instance, Nissan managed to more than triple sales of its Nissan Leaf EV in March and April after slashing its price by 18 percent. Honda followed suit last week, thereby slashing the monthly payment on its zero-down, 36-month lease from $389 to $259. To increase the penetration of its Fit EV by end of the month, Honda will increase the number dealerships that will carry the vehicle from 36 to more than 200. These carmakers are not alone. Ford, Toyota, Mitsubishi, Fiat and Chevrolet also got themselves tangled in the EV price war this year.

Steve Center, American Honda's head of environmental business development, however, admitted that discounting EVs would not work in the long-term. He remarked that excess supply of EVs has lead to artificially low prices, which have started attracting people who “who might not be best suited for an EV."

He said that this will just increase the percentage of people who will be “dissatisfied with the EV experience,” causing more damage to carmakers in the future. So far, low demand for EVs has been attributed to steady fuel prices, worries about its range and wariness of new technology, as well as people’s acceptance of gasoline-electric hybrids as "green enough." Add to that the initial high price of an EV.

Topics: electric car

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