In April’s edition of Guidelines we ran a special feature on the Chevrolet Volt and Nissan Leaf which highlighted the sales performances of the two most well-known and best-selling plug-in electric vehicles in the U.S. market today. It’s been a few months since the last article, so let’s take a brief look at how things have changed in the interim for each model.
Starting with the Leaf, back in January of 2013 Nissan announced that they would lower the entry MSRP of the Leaf by $6,400 to take the base price from roughly $35,200 down to $28,800 (not including destination). Subtract out the available $7,500 federal tax credit and the true cost of a new Leaf dropped to $21,300, plus destination and minus any applicable manufacturer incentives.
This colossal price drop was a bold move for the Leaf, but with months upon months of subpar sales Nissan had little to lose and a lot to gain. While the adjusted price was still much higher than a comparable gas-powered car, it did wonders to stoke sales of the Leaf.
Looking at July data, sales of the Leaf were up by 372% compared to the same month last year. In addition, four out of the last five months the Leaf has outsold the Volt, averaging a little more than 2k total sales per month, and year-to-date, sales of Nissan’s EV have improved by 248% compared to the same period in 2012.
Things haven’t been as good for Chevrolet as Volt sales in July were down by a little over 3%. While sales are up by over 9% year-to-date, the increase has come at a price as GM has spent an average of $9,500 a month on incentives for the Volt (per Autodata). By comparison, Nissan has spent an average of $3,550 per month on the Leaf, and over the last two months, spending dropped to an average of just $663.
In our previous feature on the two EVs we mentioned that GM stated it would monitor the success of Nissan’s lower price strategy, but that company officials made no mention of a similar option being on the table for the Volt. Clearly the recent spike in Leaf sales and the Volt’s languid performance were enough to get GM to bite the bullet and slash $5,000 from the 2014 Volt’s MSRP.
Taking the $5,000 price cut off the top of the Volt lowers the entry MSRP down to $34,185, not including destination. Subtracting out the $7,500 federal tax credit takes the true cost of the Volt down to $26,685, which lowers the price gap between it and the Leaf to $5,385.
Plug-in electric vehicles are becoming more affordable with each passing year; this is apparent in the recent Leaf and Volt price reductions as well as with the lower-priced leases offered by other OEMs on their EVs.
With any new technology there’s a heavier cost associated with being the first on the block to push a new product, and those early adopting consumers that had to have EV technology first fulfilled their desires and ultimately paid the (higher) price at the same time. But as Nissan has shown, a lower price point will unlock additional demand for EVs and GM and other OEMs can expect to see an improvement in sales with each passing reduction in MSRP.
The next test for GM – and all manufacturers producing EVs for that matter – is in finding out if these price cuts are adequately deep enough to sustain sales going forward such that EVs will eventually contribute to – rather than detract from – the bottom line.