DETROIT General Motors Co (GM.N) said on Tuesday it is slashing the price of its Chevrolet Volt electric car by $5,000 to help boost demand for the plug-in hybrid in a segment still struggling to gain a foothold in the U.S. auto market.
The price cut for the 2014 model will lower the price to $34,995, including delivery fees before federal tax credits. Pricing could fall as low as $27,495 with the tax credit.
"We have made great strides in reducing costs as we gain experience with electric vehicles and their components," Don Johnson, U.S. vice president for Chevy sales, said in a statement.
GM did not quantify the cost savings for the 2014 model, but has said the next version of the Volt, due in 2015, will cost $7,000 to $10,000 less. The 2014 models will begin arriving at dealer stores later this month.
"Chevrolet has quickly discovered that when price savings at the pump and ultimately value are your key selling points, a $40,000 cost of entry makes for a difficult hurdle to overcome for most budget conscious consumers," Kelley Blue Book senior analyst Alec Gutierrez said. He expects GM to roll out aggressively priced lease deals on the new Volt.
The 2014 Volt will offer consumers the equivalent fuel economy of 98 miles per gallon on electric power and 40 miles per gallon when powered by its gasoline engine. The car can drive almost 40 miles on its electric charge, with 380 miles of total driving range.
Several automakers have slashed prices on their electric cars to help overcome consumer qualms about high costs and fears about driving range, and are pushing to develop the technology in hopes the vehicles could become a bigger seller as fuel-efficiency requirements rise globally.
Through July, sales of electric vehicles in the United States had more than doubled from last year to almost 49,000 vehicles, according to website hybridcars.com, but still only 0.54 percent of the overall market. In the same period, Volt sales were up 9 percent to 11,643 vehicles.
In January, Nissan Motor Co (7201.T) cut the price of its Leaf EV by more than $6,000, and in May Honda Motor Co (7267.T)(HMC.N) slashed the lease price of its electric-powered Fit subcompact car by one-third. In July, Ford Motor Co (F.N) reduced the price of its 2014 electric Focus by 10 percent.
GM had cut the price of the 2013 model Volt by $5,000 to help boost demand. In late May it launched the Chevy Spark electric vehicle with a lower-than-expected starting price of $27,495 and is offering discounted leases on both cars.
The Volt price cut is another step in GM's effort to seize the mantle of "greenest automaker in the world" from Toyota Motor Corp (7203.T)(TOYOF.PK), which makes the popular Prius hybrid car. Toyota also sells a plug-in version of the Prius.
GM is aiming by 2017 to build up to 500,000 vehicles a year with some form of electric engine power, including the Volt, Spark EV and those with its eAssist system that boost fuel efficiency in gas-powered cars.
GM will begin building the Cadillac ELR plug-in electric couple late this year.
(Reporting by Ben Klayman; Editing by Jeffrey Benkoe)