EV sales to remain the same unless prices are reduced, says J.D. Power

Article by Anita Panait, on November 9, 2012

Sales of plug-in electric and hybrid vehicles in the United States may be increasing, but they are not expected to gain real traction until carmakers reduce prices and show the economic benefits of using them, according to a study released Thursday by market researcher J.D. Power and Associates. Sales of plug-in vehicles – like the Chevrolet Volt and Nissan Leaf – increased to 37,361 units for the first ten months of the year. However, sales of plug-in vehicles only account for 0.3 percent of the overall auto industry sales.

There are reasons for this. In its inaugural Electric Vehicle Ownership Experience Study, J.D. Power said that one reason why these environment-friendly vehicles failed to attract more buyers is their high price premium: an all-electric vehicle fetches an average premium of $10,000 while a plug-in hybrid carries an average premium of $16,000.  For instance, the standard 2013 Prius hybrid vehicle of Toyota Motor Corp. carries a starting price of $24,995, while its plug-in version has a price tag of $32,795.

The Volt, which is considered as the best-selling plug-in model in the US with cumulative sales of 19,309 so far, has a starting price $39,995, but could also be availed by customers through special lease rates. Neal Oddes, senior director of Power's green practice, remarked that there is still a division between the reality of the cost of an electric vehicle and the cost savings that consumers want to achieve.

Based on the cost differential between gasoline and electricity, it would take an average of 6.5 years before a customer could recover the average $10,000 price premium of an EV and an average of 11 years to recover the average $16,000 price premium of a plug-in hybrid, Power estimated. Oddes noted that before the prices of green vehicles could decrease, battery makers have first to make a "technological quantum leap" to cut the cost of battery packs, which is usually the priciest part of an electric car.

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