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.

Honda’s range of vehicles that utilize alternative fuel continues to grow and become even more diverse. The latest of this is the 2013 Fit EV which has managed to achieve the highest rating when it comes to fuel efficiency awarded by the Environmental Protection Agency. In terms of actual figure, the 2013 Fit Ev has a combined adjusted MPGe (mile-per-gallon-equivalency) rating at 118.

Fit EV runs solely on electricity and was inspired by the five-passenger and five door Fit and the Fit Sport. Inside it is a lithium-ion battery capable of 20 kWh with an AC synchronous compact electric motor that can offer 123 hp (92 kW) with peak torque at 189 lb.-ft. The highly efficient powertrain is matched to a chassis having fully-independent suspension and a 3-mode driver-selectable drive system.

This drive system was adapted from the one equipped in the CR-Z Sport Hybrid. Thus, in addition to a high EPA fuel efficiency combined city/highway rating, the Fit EV offers driving range rating at 82 miles. If that isn’t enough to entice you well, Honda has revealed that it will be making this new model available for a three-year lease starting July 20, 2012.

The lease is priced at $389 per month which means a Manufacturer's Suggested Retail Price (MSRP) comes to $36,625. However, this offering will only be initially available to certain markets California and Oregon. By early 2013 though, it will be made available to six markets in the East Coast.

Topics: electric car, sales

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