Why 'Compliance Cars' Turned Out To Be Good For Electric-Car Buyers

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2013 Honda Fit EV drive event, Pasadena, CA, June 2012

2013 Honda Fit EV drive event, Pasadena, CA, June 2012

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Electric-car advocates spend a lot of time grumbling about compliance cars.

But it turns out that even in low volumes, limited mostly to sales in one state, they've unexpectedly produced a benefit for all electric-car buyers: lower prices.

Recent price reductions to "move the metal," as Detroit would say, have made plug-in electric cars surprisingly cheap--and led to shortages of some models.

The latest is a reduction in the lease cost of the low-volume 2013 Smart Electric Drive Coupe, from $199 a month (if the customer accepts the Battery Assurance Plus program) to just $139 per month.

Volt price cut

Then, yesterday, the sticker price of the 2014 Chevrolet Volt fell to $34,995--a whopping $5,000 reduction.

It started when the Honda Fit EV lease cost was lowered from $389 to $259, leading to long waiting lists at Honda dealers.

Honda was worried that it wouldn't deliver enough Fit EVs to get it to 1,100 over a three-year period--its required minimum under California law.

The price reduction worked, but while Honda apologized to customers for the long wait, it will not build any more than the announced 1,100 lease-only Fit EV compliance cars.

Then Fiat launched its 500e out of the box with a $199-per-month lease cost, following the lead of Chevrolet with its 2014 Spark EV.

All three cars--the Chevy, Fiat, and Honda--have been well reviewed and deemed fun and peppy to drive by the auto media.

All makers under pressure

These reductions had a big effect on the prices of the two high-volume plug-in competitors.

The 2013 Nissan Leaf base price had already been cut to $28,800 (about $6,000 less than 2012), and Nissan kept the popular $199 monthly lease program it started last year.

2014 Chevrolet Volt

2014 Chevrolet Volt

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Then came yesterday's Volt price cut. A reduction had been expected, but $5,000 was higher than most analysts anticipated.

It's worth noting, by the way, that remaining 2013 Volts are already being discounted by more than $5,000, so the Volt price was really just adjusted down to reflect the sales reality.

This all adds up to good news for shopper tempted to buy a plug-in electric vehicle but daunted by the high sticker prices--and for the long-term prospects of electric cars in general.

Up to five compliance cars

"Compliance cars" are those battery-electric vehicles built in low volumes not because the maker believes in plug-in cars, but because California's strict zero-emission vehicle (ZEV) rules require the six highest-selling automakers to deliver a certain number of cars with no tailpipe emissions in the state.

The first set of those rules applies from 2012 through 2014, and a new and more expansive set starts for 2015.

Of the six automakers affected today, Nissan has no problem: It is selling far more Leaf electric cars in the state than its mandated minimum.

The rest, however, are a different story.

Automakers object

We identified a list of probable compliance cars more than a year ago on this site.

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

2013 Fiat 500e electric car, Los Angeles drive event, April 2013

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That article led to much discussion and hand-waving among some makers, furiously claiming their battery-electric cars weren't "just" compliance cars. That's a topic we'll take up in a different article.

But five separate compliance cars--or at least likely candidates--are now on sale in California (and a few elsewhere as well).

They are the Chevrolet Spark EV, Fiat 500e, Ford Focus Electric, Honda Fit EV, and Toyota RAV4 EV.

Leaf: # 1 affordable battery electric

All so far are selling fewer than 200 copies a month, against many times that figure for the Leaf.

We remain open to the notion that the Spark EV will deliver sales numbers beyond GM's required minimums under the California ZEV laws.

But Chevy will have to make a concentrated nationwide sales effort, and it's still a minicar--which has historically been a tiny segment of the U.S. market.

Stay tuned on that one.

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