Electric-Car Prices: Tesla, Nissan, Chevy Should Be Ashamed--Here's Why
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2012 Nissan Leaf electric car - net pricing shown on Nissan website
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Always read the fine print. That's a lesson every car buyer should take to heart.
Especially since Nissan, Chevrolet, Tesla, and Mitsubishi all now engage in a pricing practice of which they should be ashamed.
It's so-called "net pricing" of their electric cars, in which the price appearing in their marketing and on their websites is $7,500 lower than the actual list price.
While electric-car advocates and fans may understand the practice, the broader public doesn't.
And the sticker shock at dealers can be substantial when a buyer, prepared to spend $27,700 for a brand-new 2012 Nissan Leaf suddenly learns that in fact the price is $35,200.
What's the difference? It's the $7,500 Federal income-tax credit for purchase of an electric car (with a battery pack of 16 kilowatt-hours or more).
First, it can take up to 16 months to realize the savings: A Leaf owner who bought her car this past January won't realize the $7,500 savings until she gets her 2012 tax refund--sometime in April or May 2013.
The credit can be realized immediately by leasing the electric car rather than buying--the lease issuer claims the credit and reduces the monthly cost accordingly--but not everyone wants to lease.
Second, not every buyer will qualify for the tax credit (though most people with the means to buy a $35,000 to $85,000 electric car probably will).
And third, buyers incur an extra $900 in financing costs over a typical 60-month loan term to finance that extra $7,500.
Showing how the lower-than-list price is prominently featured, here are pages with the four companies' electric-car prices in large, distinct type:
- 2012 Tesla Model S: "$49,900" (it's actually $57,400, or 15 percent higher--though we give Tesla a bit of credit for noting "After $7,500 Federal Tax Credit" in tiny silver type at the side)
- 2012 Chevrolet Volt: "MSRP As Low As $31,695" with two separate footnotes (it's actually $39,195 before delivery, or 24 percent higher)
- 2012 Nissan Leaf: "Starting at $27,700" plus an asterisk (it's actually $35,200, or 27 percent higher)
- 2012 Mitsubishi i: "As low as $21,625 net value, after tax saving" with a footnote (it's actually $29,125, or fully 35 percent higher--though its pricing detail page spells it out nicely with the credit deducted at the bottom)
Yes, they all have asterisks or daggers that indicate there's fine print to be read.
Yes, even gasoline cars have mandatory delivery charges (usually $600 to $1,000) that aren't included in the base price.
And, yes, we get that it's "effective pricing after Federal incentives."
We still think net pricing of electric cars is deceptive, duplicitous ... and, frankly, counterproductive.
And electric-car advocate Chelsea Sexton goes even further.
"While tempting, the practice of net price quoting is misleading," she says, "and all but guarantees sticker shock when buyers are asked to hand over or finance the full amount at time of purchase"
Rather than this bit of pricing trickery, "it would be far more useful for automakers to engage in the third-rail conversation of actually reforming the tax credit," Sexton suggests.
"There are a handful of ways that would make all of their vehicles more affordable, and support increased plug-in sales, while also saving taxpayer money."
Sexton is referring, among other ideas, to converting the Federal tax credit into a purchase rebate.
Under that plan, rather than waiting up to 16 months, buyers would get a rebate check in the mail within weeks--as is now the case for the $2,500 California incentive for buying all four cars.
President Barack Obama said more than a year ago that he's in favor of that change, and proposed in his 2012 budget to raise the incentive to $10,000.Neither change has happened, and we suspect that all of Washington will stay as far away as possible from electric-car incentives until after the November election.
The outcome of that election will likely affect those incentives--for good or for bad.
Meanwhile, we urge automakers to post the actual list price for their plug-in models, not some hypothetical "effective net price" that differs radically from the check buyers must write.
It's simply called honesty and transparency.
+++++++++++
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Have an opinion?
You can be sure that if I am in the position that I purchased any of these models the first thing I would do is change my tax with holdings so that I recover the full amount of the tax credit so that I am not "out of pocket" the tax credit amount (assuming my accountant confirms there are no issues in doing so).
Am I missing something?
I don't think that changing your withholding will impact your ability to recover or not-recover the $7500.
On the other hand, it might be a cleaver way to not have to wait the 16 months, assuming you do qualify.
Just remember, we have a quarterly tax system here in the USA and you need to meet your tax obligations each quarter (not just at the end of the year). Failure to do so can result in fines.
Personally, I would prefer to own my own battery since my car is useless without it.
it can be VERY confusing. as a car salesman who is new to the profession, its a complicated mess of rebates, holdbacks, etc that is partially controlled by the Credit app of the buyer. ya, people with 800+ get better deals. that is all there is to it so specifics in an ad is impossible. crap like "up to $XXX" only allows the "have nots" to know what they aint getting that others are. its a "dont go there" for any dealership
Beyond that, what you call a "bitter tone versus the plug-in industry," I would consider to be consumer education. If plug-in vehicles are to emerge from the EV-fan ghetto and enter the mass market over time, new buyers won't bring as much knowledge to the table.
The notion that, "Oh, everyone knows that, who cares?" feels insular, borderline arrogant, to me. My 2 cents.
The argument that people finance first and subsequently use the tax credit money for somethings else is frankly just grasping at straws from your part; too bad you won't admit your mistake in this argument. Which along with qualifications like "trickery" "deceptive", "duplicitous" and now "borderline arrogant", brings us to the bitter tone again I'm afraid.
It is all about being "up front" with people.
Plus one for mentioning the financing issue John, but you go from a minimum of 6 months, then claim 60 months of rough seas. Can't have it all sir. I would posit if the recipient did not use the $7,500 to pay down the loan, that is another issue altogether. Hence whatever the money is used for, is now being financed, at the recipients choice. And $7,500 of actual vehicle financing stopped when the check was received.
If the credit can be changed to a rebate, that will solve the whole thing. In the mean time, I think the problem is overblown for the vast majority of EV buyers (who are educated on the credit).
Here is what I did when I bought my Volt.
1. Put an extra $7500 down when I bought the car above and beyond my down payment. I'm loaning myself $7500, this removes any extra interest I would have to pay on the refund.
2. Adjust my withholdings at work for the remainder of my paychecks for this year. I changed to S-9. Between now and the end of the year I will get about an extra $4,000 in my paychecks to start paying that $7500 back.
3. File the forms for the tax credit next year. Get the remainder of my tax credit back.
Once one EV manufacturer is advertising pricing in this (questionable) way, there is a lot of pressure for the others to follow suit. This makes the prices more comparable.
We had this situation in tape drives years ago. A competitor started advertising the "compressed capacity" of the tape rather than the actual capacity. We had to do the same thing or suffer a market disadvantage of 2:1 in apparent capacity. We did it but felt it was dishonest.
same thing occurs when people vote.
No bitter tone here, just one dude's opinion. I am pro EV. I have a Leaf.
Otherwise, anyone interested in the price needs to know that there are tax credits, and what the price is *after* tax credit. Otherwise it wouldn't make sense for the government to spend that money, and I think it does make sense. Even if a point-of-sale rebate would be even better. The reduced price is what most people really pay, once the dust settles.
Also think that this issue is overblown here. This is not a sufficient reason to overthrow the political two-party system. ;)
Which is important especially for those who have difficulties with the sticker price, since they are more likely to buy 2nd hand.
Instead, because the majority of our readers (and of our advertisers) are in the U.S., this article applies to U.S. pricing, Federal rebates, and buyers.
The car ads in MY local papers have the MSRP for specific vehicles in obvious and large type, regardless of whatever other offers are applied. That is not the case with the Nissan screen at the top of this article. The ONLY visible price is "$27,700" which is $7,500 less than the amount that the buyer must pay (or finance).
Today's EV buyers may be "a notch savvier and more educated," but Nissan's very ambitious goals for Leaf sales mean you & your counterparts need to move beyond early adopters--and quickly.
As noted before, you and I may come at this from slightly different points of view. Appreciate your contributions to the discussion.
i drive the Fluence ZE, a 100% electric plug in which costs, in Israel, where the taxes are high and no refund is ever given, 30K dollars. If it were not for taxes it would be a 23K$ car. Battery included, but i don't pay for it, because its price is calculated into my mile charges. i pay 20 cents per mile which includes everything: battery, swapping, home and away charging and 24/7 service. Thats's because at 15 cents a KwH, and 4 miles per KwH, the mile actually costs 4 cents, leaving 16 cents per mile for Better Place to run its service and make a profit. Good deal all round cosidering 8 dollar a gallon gas.
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