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Is A $24,000 Price Needed For Electric Car Sales To Soar?

 
1,606 views Dec 19, 2011
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2011 Nissan Leaf SL

2011 Nissan Leaf SL

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This past January, many commentators hailed 2011 as the year of the electric car.

But as we approach the end of the year, neither Chevrolet nor Nissan has sold as many plug-in cars as it had predicted a year ago it would--due to everything from the Japanese earthquake and tsunami (Nissan) to overly optimistic rollout projections (Chevy).

According to analysis firm Pike Research, electric-car buyers will continue to be sparse until one thing changes: price.

In its latest report, Electric Vehicles: 10 Predictions For 2012, Pike concludes that while the selection of plug-in vehicles on sale in 2012 will be larger than the selection in 2011, many consumers will still be unable to buy a plug-in car. 


Still Too Expensive

According to Pike Research, recent price rises in cars like the 2012 Nissan Leaf, combined with a drop in specification for the base 2012 Chevrolet Volt, haven’t helped the image of electric cars as affordable in the eyes of consumers. 

In fact, according to its own research, most consumers will be unable to consider an electric car as a viable alternative until prices have dropped below $23,750.

At the moment, even the cheapest highway-capable car on the market today, the 2012 Mitsubishi i ES, now stickers at $29,125 before federal or local purchase incentives are applied. 

2012 Mitsubishi i - First Drive, U.S.-spec MiEV

2012 Mitsubishi i - First Drive, U.S.-spec MiEV

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No Price Drops In 2012

Those waiting for cheaper plug-in cars during 2012 will be disappointed, the survey concludes.

“Automakers are recouping the huge investments in R&D and retooling the plants to assemble these new technology vehicles,” the report explains. “Thus, charging more to the early adopters is not unexpected."

In addition, the natural disasters in Asia combined with global financial uncertainty has kept the cost of raw materials and manufacturing high, combined with the added cost of importing cars from Japan, where the 2012 Nissan Leaf is made. Nissan plans to assemble the 2013 Leaf in the U.S. starting in 2013, at its plant in Smyrna, Tennessee. 

2012 Chevrolet Volt

2012 Chevrolet Volt

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Until the costs of battery packs drop and production volumes rise, electric car prices will remain high.

Three-year cycles?

Pike Research predicts costs will stay high until 2013 or perhaps even 2014. Other analysts have suggested that prices will drop in three-year cycles, meaning that we're halfway through the first one (2011 through 2013), and the situation should improve for the 2014 model year.

Running costs of electric cars are far lower per mile, and so are maintenance costs for pure battery electric vehicles.

But retail buyers notoriously overweight initial purchase price and underweight the total cost of owning a car, so that sticker price matters a lot to get a customer to sign on the dotted line.

What price do YOU think is the level at which a much larger public will start to consider electric cars more seriously? Leave us your thoughts in the Comments below.

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Comments (18)

  1. fb_100002494343393 avatar Jason Hendler Posted: 12/19/2011 9:49am PST

    Right now, neither the Volt, nor the LEAF, have any competition, so I don't see their prices dropping until they do. Let's see what happens when the Plug-in Prius and the Focus Electric show up nation wide.
     
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  2. CDspeed avatar CDspeed . Posted: 12/19/2011 9:50am PST

    I think things will change when prices are better matched to what level of car your getting.
     
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  3. ev_enthusiast avatar EV Enthusiast Posted: 12/19/2011 10:02am PST

    the reports have it backwards. there is a ton of interest in the cars that have been produced. the proof is that there are waiting lines.

    the price will come down WHEN IT IS NEEDED FOR THE PRICE TO COME DOWN. and not one second before that. they want to make as much money as they can.

    this is how all products work, not just evs.

    so if one wants to guess when prices will drop, then one needs to guess about how soon the supply will increase.

    this is why it is important to get evs on the road. so far, the leaf is the only ev out there. hopefully coda, focus, and many others will join in the next couple years.
     
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  4. Cardmaker63 avatar Cardmaker63 Posted: 12/19/2011 10:34am PST

    I wonder how many of the older population will be in line for an electric vehicle, since the price tag is high, and many seniors may not live long enough to realize a significant return on their investment. Yes, there will be a savings in gasoline expense, but there is always a trade-off somewhere along the line. You will not be able to charge up these batteries for free, even at your own home. Also, how will the cars perform in adverse Northeastern weather conditions. These roads in my area are drifted high with snow almost as soon as the plows go through, and I've seen plenty of vehicles with small tires just sitting there, unable to get anywhere at all.
     
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  5. fb_100002544459353 avatar Ramon Leigh Posted: 12/19/2011 10:41am PST

    We all know why prices are high - battery costs. Any analyst who doesn't recognize this 500 pound gorilla is not qualified to make
    price predictions. And its not just a matter of initial battery costs either. With battery lifespans of under 10 years,
    operating costs of electrics are being grossly underestimated. Battery replacement costs must be included in any operating cost estimates and/or the value of the car down the road. But estimating battery costs 8 years from now (when the Volt will need another battery pack)is impossible, although everyone hopes that the costs have dropped enough so that EVs can compete across the board. Auto "experts" have this bad habit of basing their opinions on a technology that they know : ICE vehicles.
     
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  6. quartzav avatar quartzav Posted: 12/19/2011 1:38pm PST

    Why do you always assume battery will need replacement after 8 years of warranty? From January 2012, California spec Volts will have battery warranty of 10 years. So do you assume Volts destined to California will magically have better battery? Following your logic then any ICE vehicle will need ICE replacement after warranty period? And the battery cost from my local GM parts currently indicates $3000 now, no rumored higher price.
     
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  7. fb_100000384489696 avatar James Thurber Posted: 12/20/2011 8:14am PST

    I'm no sure about the Volt, but I know that the warranty for the batteries for the leaf do not cover the loss of capacity over time. I would imagine that the Volt warranty is the same. Thus, the buyer is stuck with either buying a new battery pack after several years, or living with an expensive car with extremely limited range.
     
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  8. quartzav avatar quartzav Posted: 12/20/2011 10:19am PST

    This would dive into the specifics of the way battery capacities are utilized. The Volt battery only utilizes 60% of the actual total capacity of that battery pack. So factor in the deterioration of total capacity to 80% in 10 years would theoretically impact electric mileage minimally. So able to travel 32 miles electrically after ten years rather than original 40 miles and still has ability to extend range via ICE hardly can qualify as “living with an expensive car with extremely limited range.” I would suggest you read more into different manufactures approach on how they program to use the battery.
     
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  9. Chris O avatar Chris O Posted: 12/19/2011 11:17am PST

    At this point EVs cost roughly double what you would expect to pay for an equivalent ICE vehicle. The first car to break this pattern should be the Tesla Model S: Jaguar money for a car that looks and performs like a Jaguar. For the compact class 2015 may be the turning point when the current battery tech is replaced by next gen batteries like Nissan's nickel manganese cobalt Li-ion cell.
     
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  10. fb_542856692 avatar Rich Civil Posted: 12/19/2011 11:29am PST

    Price really isn't the issue at this point. The current prices still have waiting lists of people willing and able to pay those prices.
     
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  11. fb_54604718 avatar Dallas May Posted: 12/19/2011 12:46pm PST

    Honestly, I think under $30k is a good number. Once people start seeing them on the roads, and hearing enough of their friends and co-workers talk them up, they will buy them.

    Think about it this way. Why are people willing to pay a premium for a Macintosh Computer. I recently sold my 7 year old iBook with a bad battery on e-bay for $400. Why would anyone pay that? Because value is more perception than anything else.
     
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  12. jimkainz avatar jim kainz Posted: 12/19/2011 12:50pm PST

    Government subsidies could start the revolution to get off our addiction to foreign oil in an instant. China does it to dominate technological game changers. We can do it too if we do not want to fall behind in global competition. Our status as the reserve currency means we can print money to finance subsidies to lead this inevitable market force. The best stimulus plan for America is to subsidize fuel efficient cars. hermosaspg (at) yahoo.com
     
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  13. James Davis avatar James Davis Posted: 12/19/2011 1:21pm PST

    From the way things sound, I'll be driving my ICE for the next ten years. Those cycles you spoke of lasts about ten years, not two to four. It took Ford 20 years to wake up and change that puffball design they had for the cars. As you may remember, it didn't change until the 2005 Mustang came out.
     
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  14. gergs avatar gergs Posted: 12/19/2011 5:31pm PST

    Been saying it all along. I'll never be able to evebn contemplate an EV until orices come way down. We even decided against a Prius because the Yaris had a much cheaper price tag and gets 39mpg highway. Need the price to make sense for the average household income.
     
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  15. Warren avatar Warren Posted: 12/19/2011 7:43pm PST

    "Until the costs of battery packs drop and production volumes rise, electric car prices will remain high."

    Until someone produces smaller, more aerodynamic electric vehicles, with smaller battery packs, prices will remain high.
     
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  16. fb_508083574 avatar Dan McComb Posted: 12/20/2011 10:56am PST

    Price is definitely a big deal, but as with any type of sale, it's about selling. We went down to test drive a leaf after our Nissan dealer called us up and told us one had become available, and would we like to try it out? We ended up driving it home, despite the fact that it was more than we planned or wanted to spend. Fortunately, we haven't had buyers regret. On the contrary, it's been worth every penny.
     
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  17. BenBrown avatar Ben Brown Posted: 12/20/2011 12:19pm PST

    "But retail buyers notoriously overweight initial purchase price and underweight the total cost of owning a car, so that sticker price matters a lot to get a customer to sign on the dotted line."

    Add to that, our present financial system/economic stability does not envision a true value of an electric car. Presently its value is based on an ICE standard. Question for Nikki? Should it be considered somewhere between a home and ICE car investment? Should a 8 year EV loan be more in line with its true value?
     
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  18. fb_1567249303 avatar Patrick Connor Posted: 12/31/2011 5:30pm PST

    I'd like to see a plan where one could buy the car and lease the batteries. BP has talked about this, but I don't mean with swap stations. I'd just like to see it as a financing option.
     
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