EV price war erupts as GM cuts tag of Chevrolet Volt

Article by Anita Panait, on August 12, 2013

There is now an ongoing battle between carmakers in the electric vehicle segment – a price war! One by one, carmakers are offering discounts on the prices of their offerings, making electrified vehicles more affordable this year than in 2012. It all started in January 2013 when Nissan Motor Co. cut the sticker price of its Leaf electric vehicle by around $6,400.

That resulted to higher sales and other carmakers followed suit, particularly Ford Motor Co. and Honda Motor Co. The price cuts made by these carmakers have left General Motor’s electrified offering, the Chevrolet Volt plug-in electric vehicle, as the priciest mainstream plug-in EV. The Volt has a sticker price of nearly $40,000 sticker price, which does not look appealing enough for people who know they could get a Toyota Prius for a significantly lower tag of $25,010 Toyota Prius.

GM posted a 3-percent drop in sales of the Volt in July, and bared last week that it would trim the price of its plug-in offering by $5,000. This effectively dropped the price of the Volt to $34,995. Jeff Schuster, an analyst at researcher LMC Automotive, remarked to Bloomberg that the EV segment is having “a competitive nightmare,” which forces carmakers to play “within the realm of what others are doing." He noted that, although price war is no longer occurring in the auto industry’s volume sector, it is “alive and well” in the EV segment.

There has been concern that the price war would explode on a larger scale since the Japanese yen started depreciating October 2012. The yen has dropped 18 percent since October 2012, and has been giving Japanese carmakers an extra hand to cut prices while protecting profits. Nissan has trimmed prices of seven models in the United States, while Toyota is offering no-interest auto loans. Toyota also posted a record quarterly profit of $5.7 billion.

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