Electric vehicle prices must fall for sales to take off -study

DETROIT Thu Nov 8, 2012 3:54pm EST

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DETROIT Nov 8 (Reuters) - U.S. sales of plug-in electric and hybrid vehicles are rising, but they won't gain real traction until manufacturers lower prices and demonstrate clear economic benefits, market researcher J.D. Power and Associates said in a study released on Thursday.

Sales of plug-in vehicles, such as General Motors Co's Chevrolet Volt and Nissan Motor Co's Leaf, rose to 37,361 through October, but that represents only 0.3 percent of total industry sales.

One reason these "green" cars have not lured more consumers is the hefty price premium -- an average $10,000 for pure electrics and $16,000 for plug-in hybrids, Power said in its inaugural Electric Vehicle Ownership Experience Study.

The standard 2013 Prius hybrid vehicle from Japan's Toyota Motor Corp, for example, has a base price of $24,995, while the plug-in version lists for $32,795.

The Volt, the country's best-selling plug-in model with cumulative sales of 19,309 this year, starts at $39,995, but has been available to consumers in recent months at special lease rates.

"There is still a disconnect between the reality of the cost of an EV and the cost savings that consumers want to achieve," said Neal Oddes, senior director of Power's green practice.

Based on the cost differential between electricity and gasoline, it takes an average 6.5 years to recoup the $10,000 EV price premium and 11 years to recoup the $16,000 plug-in hybrid price premium, Power estimated.

Before the price of such vehicles can come down, Oddes said, battery manufacturers will have to make a "technological quantum leap" in order to reduce the cost of battery packs, typically the most expensive part of an electric car.

Driving range and availability of battery charging stations outside the home remain among customers' chief concerns, according to the study, which polled 7,600 respondents in October.

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Comments (1)
ndhawk88 wrote:
“won’t gain real traction until manufacturers lower prices and demonstrate clear economic benefits”

– People don’t generally buy cars as investments. They buy cars they like. If you want economic benefits, you would buy a used car. I don’t agree with JD Power on this one.

“represents only 0.3 percent of total industry sales”.

– That’s only 2 cars representing 0.3 percent of total industry sales. Is that supposed to be bad? There are plenty of 2 car combinations that combined make up 0.3 percent or less of total industry sales.

“Based on the cost differential between electricity and gasoline, it takes an average 6.5 years to recoup the $10,000 EV price premium and 11 years to recoup the $16,000 plug-in hybrid price premium, Power estimated”

– People generally get loans when they buy their car. They only pay the premium a month at a time. They are also receiving there cost savings one month at a time. So it’s not like they start from way behind and it takes 6.5 years to catch up. They fall a little behind each month until 5 years (or whenever the loan ends) and then it starts gaining. After 6.5 years, it’s break even and better. But as I said before, people generally don’t buy cars as investments. The Volt, at $40k minus tax credits is outselling half the cars on the market today in the U.S. Obviously more people will want it when they can afford it, but that is the same for all cars.

Nov 09, 2012 7:25am EST  --  Report as abuse
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