Is $23,750 The Right Price To Get Electric Car Sales To Soar?

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Electric Vehicle price sensitivity analysis, by Pike Research, July 2012

Electric Vehicle price sensitivity analysis, by Pike Research, July 2012

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There are many reasons plug-in electric car sales are still just a tiny fraction of the market.

The biggest hurdle may be high price, compared to gasoline cars of the same size, right now (along with range limitations).

Despite a cost-per-mile that's just a fraction of what a gasoline car costs, most consumers walk away when they see a sticker twice as high.

Now industry analyst Pike Research has crunched some numbers, and calculated the price at which it feels car buyers would seriously consider electric cars as viable gasoline competitors.

That price? $23,750.

As Pike analyst John Gartner puts it in a recent post:

The optimal price point for selling a plug-in electric vehicle where consumers would feel that they were neither too cheap nor too expensive is $23,750, which is $10,000 to $15,000 or so less than current plug-in electric price tags.

Pike uses consumer survey data on how buyers perceive value based on price for electric vehicles. There are four sets of data, showing the percentage of more than 1,000 survey respondents who feel that a car is "Too Cheap," a "Bargain," "Expensive," or "Too Expensive."

The post includes not only a photo of carrots (incentives, get it?), but a graph showing its "Electric Vehicle Price Sensitivity Analysis."

The graph's colored lines clearly show the price at which an equal number of consumers feel an electric car would be a "Bargain" as feel it would be "Expensive".

Gartner calls that the "indifference point," and those two lines cross at $23,750.

While we have a number of questions (including whether that price is before incentives or it's a "net price," meaning incentives are already subtracted out), the result feels broadly right to us.

A 2012 Nissan Leaf in the low-level SV trim level, with an EPA-rated range of 73 miles, starts at $35,200.

2012 Nissan Leaf electric car - net pricing shown on Nissan website

2012 Nissan Leaf electric car - net pricing shown on Nissan website

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In California, the higher trim-level Leaf SL (which makes up the majority of sales) still runs $28,100 or more even after netting out fully $10,000--comprising a $7,500 Federal tax credit and a $2,500 state purchase rebate.

More Leafs have been sold in California than in any other state, but the $35K-plus sticker price is undoubtedly a turnoff when the Nissan Sentra 10 feet away starts at $16,430.

With lithium-ion battery costs likely to decline at 6 to 8 percent a year, and the cost of gasoline cars set to rise in real dollars as they acquire more expensive powertrains to meet stiff new fuel economy rules, electric cars will likely come into their own by the end of this decade as their prices fall.

But until the difference is far lower than it is now--perhaps $5,000, or the difference between a stripped compact model and a high-line version, say--electric cars are likely to remain niche players.

So tell us: At what sticker price (never mind running costs) would a plug-in electric car become irresistible to you?

Leave us your thoughts in the Comments below.

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