Hoovey689

iTrader: (16)

Why EV prices are being slashed, and how that affects pickup sales

So, hey, what's up with all these plug-in vehicle price drops? The 2013 Nissan Leaf kicked off the trend with a $6,400 decrease in January. Since then, we have seen lower and lower lease prices for EVs and the 2014 Chevy Volt just joined the party with a $5,000 drop last week. The lower prices have sparked a big increase in plug-in vehicle sales this year, compared to last, so, hey, what's up with all that?

"People forget that this was brand-new technology. Of course the price will fall."

A number of articles are floating around, trying to answer the question, and we thought we'd point you to a few of them. Automotive News took a look at the issue, wondering how long the automakers can stand to lose money (while pointing out that Nissan head Carlos Ghosn has said the Leaf is profitable, even at the new, reduced price). Part of the price war is that these cars are getting cheaper to make; another part is simply that the OEMs need to offer competitive prices to the customer. Our friend Chelsea Sexton said this is all just how the industry works. "They know that part of the game is not making money in the first few years because they see the market growing," she told AN. Jon Bereisa, CEO of consulting firm Auto Lectrification, told AN that it's a temporary situation, "People forget that this was brand-new technology. Of course the price will fall. The price of your smartphone doesn't go up. It goes down."

"The good thing about the Volt and the bad thing about the Volt is that the volumes are low."

Bloomberg got an analyst to come up with a number for how much "research and development cost" is in each Volt: $9,000. This compares to about $1,200 in the "average automobile." Those numbers come from Sean McAlinden, chief economist with the Center for Automotive Research in Ann Arbor. Another analyst, Anthony Pratt, director of forecasting for the Americas at R.L. Polk, told Bloomberg that it is thus a somewhat good thing the Volt isn't selling in huge numbers. "The good thing about the Volt and the bad thing about the Volt is that the volumes are low," he said. "If they have to concede on price and lose money on every one, the amount of the revenue lost based on incentives won't be as significant as a higher volume [vehicle]."

But Businessweek points to another wrinkle in the plug-in sales pictures. Namely, how selling more Volts at cheaper prices allows GM to sell more pick-up trucks. The article lays it out: "Chevy is slashing Volt prices because it has been selling a ton of pickups and wants to keep doing so." The reason is how CAFE works, and you can get all the details in the original article.

http://green.autoblog.com/2013/08/13...ts-pickup-sal/

I8ABMR

very interesting Seems like they may be making an investment in the future. The more of these newer green cars they sell the more likely they are to sell more in the future . Thanks for sharing Hoovey

Hoovey689

iTrader: (16)

It's a very interesting thought indeed. Make an affordable EV more attainable for the masses which in turn enhances the truck buying segment 10 fold, what with their $20,000 base to an even more lucrative $60,000 optioned AND equipped unit?!

How devious I say

isthree50

iTrader: (1)

I work for Toyota u should see the rebate on the rav4 ev....... $14,000 lease cash

Hoovey689

iTrader: (16)

The manager at my Lexus store got his friend into one of those. I couldn't believe the incentives on it!!

bitkahuna

iTrader: (20)

"lose a dollar on every one and make it up in volume"

but yeah, the idea of 'giving' away the high fuel economy vehicles so you can sell greater numbers of less efficient trucks makes some sense, but the numbers don't work as they probably sell as many trucks in a day as they do volts in a year. and making the volt cheaper has limits given its significant limits in appeal.

LexFather

Another article picking on EV's. Should I post a list of all the gasoline cars that need giant discounts to sell as well?

isthree50

iTrader: (1)

Actually correction I checked the finance navigator when I got to work today $15,400 lease cash and $1000 pull (bonus from the manufacture) for the salesman

Infra

iTrader: (1)

I really find it odd that some choose to evaluate every car as if it was an independent product rather than taking a broader look at how a manufacturer's entire portfolio supports itself.

Selling more Volts means they can self more Pickups. People coming in to look at Volts means they might buy another Chevy vehicle. The Chevrolet SS will likely lose money on its own in an attempt to revitalize the brands performance credentials outside of the Single Male With No Kids who buys the Camaro or Corvette because every other product they had was extremely dull.

jimbosr1

what does all this mean?

Hoovey689

iTrader: (16)

That the $49,000 price tag on Rav4 EV doesn't mean anything

Habious

This just shows how utterly screwed up the CAFE standards are.

"We should raise CAFE standards to increase cars' fuel economy!!"

A wonderful sentiment, to be sure but, that's not how it works.

The CAFE standards don't punish automobile manufacturers for selling fuel inefficient cars...it punishes automobile manufacturers for the fact that CUSTOMERS buy fuel inefficient cars.

It's based on the average fuel economy of what is SOLD...not what they sell/market/offer.

Ford could offer 10 different models...with 9 of them being 50+ MPG super-hybrids, with the 10th being the F150 (that gets 15 MPG)...and if people chose to all buy F150's...then Ford has to pay a huge fine for not meeting the CAFE standards.

How does a law that punishes one group of people based upon the action of a different group of people help anyone in any way?

Hoovey689

iTrader: (16)

It's not that harsh. Truth be told I just think the Volt is ugly and part of why it doesn't sell. Oh and the fact that it isn't at true EV losses me off. It it has electric and a internal combustion engine, that would be hybrid GM.. A plug in, but a hybrid nonetheless