Electric cars are not selling as well expected as consumers don’t appear to be warming up to this new technology. While mass appeal takes time to set in, how are automakers responding to the lack of consumer demand?
According to NBCNews, Ford Motor Company (NYSE:F) has issued the latest price cut as it lowered the price on its Focus EV by $4,000 with a new MSRP for the model of $35,200. Ford Motor Company (NYSE:F) believes the price change will help the Focus better compete with other electric vehicles that have also seen recent drops in price. In January, Nissan Motor cut the price of the 2013 Leaf by $6,400 and lowered the model’s sticker price to under $30,000.
Automakers have been under governmental pressure to improve the fuel economy of their fleets by over 50% in the coming years. And at least nine states, along with California, are pushing for electric, hydrogen-powered, and hybrid vehicles to make up 15% of new-car sales by 2025. In April, General Motors Company (NYSE:GM) CEO Dan Akerson estimated that the Chevy Volt, currently priced at just over $39,000, could drop in price by $7,000 to $10,000.
Remembering when hybrids first hit the market
The recent price drops among several automakers are similar to what occurred when hybrid vehicles were first introduced to consumers. Quoted on Bloomberg Businessweek, Jeremy Acevedo, a pricing analyst with auto researcher Edmunds.com, believes the segment isn’t strong enough to support the price points originally set by automakers.
Acevedo predicts the electric vehicle market will evolve in a similar way to hybrid technology. Hybrid cars currently make up 4% of car sales, but took a decade to gain acceptance in the U.S. car market. Hybridcars.com reports that while electric plug-in cars have doubled since the start of 2013, they account for less than 1% of U.S. car sales.
Along with their current lower prices, electric vehicles come with incentives in the form of government tax credits and manufacturer rebates. Hybridcars.com ranks the Chevy Volt as the U.S.’s top-selling electric model in June at 2,698 units, a distinction aided by its nearly $6,200 in incentives. In second place came Nissan’s Leaf with 2,225 units sold and just under $7,000 in incentives.
Ford works on making the technology accessible
In 2012, Ford Motor Company (NYSE:F) introduced, in North America, six new vehicles that use electric power, including hybrids, plug-in hybrids, and an electric vehicle. The company is working on simplifying the charging process, considered the single biggest adjustment consumers need to make when switching over to electric cars.
Ford vehicles in the U.S. have advanced communication systems that give the driver information on how to maximize the driving range of their vehicles, find charging stations based on their location, and determine how far they can drive before their next charge.
Since the Ford Motor Company (NYSE:F) Electric rolled into the market in 2012, Ford Motor Company (NYSE:F) has built 2,517 vehicles and sold 1,593. For the first six months of 2013, Ford sold 900 electric models. The company’s June sales of small cars grew 39% over last year; the 35,851 units sold included models like the Fiesta, C-MAX, and the Focus, all of which use a gas-powered engine. Ford Motor Company (NYSE:F)’s overall car sales through June were up 12%.
Nissan’s Leaf catching up to the Volt in unit sales
Nissan’s Leaf came in second place in number of units sold in June and the model had record sales in March, April, and May of this year, according to hybridcars.com. The Leaf is the only mid-sized, five-passenger electric car priced under $30,000 and one of only three models sold in all 50 states.