Sales of electric vehicles climb higher and prices drop

Aug 6, 2013

GM announced today that the price of a Chevy Volt will drop by $5,000:

The 2014 model will start at $34,995...

If consumers include federal tax credits ranging from $0-$7,500 (depending on individual tax liability), pricing could start at $27,495.

David Shepardson of the Detroit News wrote this morning that Nissan, Ford, and Honda have also lowered the price for their electric vehicles "in the face of lagging consumer demand."

He quotes David Cole of the Center for Automotive Research:

“To go mainstream, you are going to have to lower the price,” Cole said. “Automakers are taking costs out of the EVs, which will allow them to cut the costs. Automakers are going to have to sell these vehicles in higher volumes to meet future fuel economy standards.”

The U.S. Department of Energy watches sales of electric vehicles closely.

And while sales of electric vehicles are still small compared to total car and truck sales, sales are going up:

During June 2013, 44,924 HEVs [Hybrid-electric vehicles] (43,184 cars and 1,740 LTs) were sold, up 30% over the sales in June 2012...

Total 8,742 plug-in vehicles (4,169 PHEVs and 4,573 AEVs) were sold in June 2013, up 163% over the sales in June 2012.

Here's a historical look at the market in graph form (alongside gas prices):

 

Electric vehicle sales graphed with gas prices.
Electric vehicle sales graphed with gas prices.
Credit Argonne National Laboratory

In addition to trying to boost demand, price drops in electric vehicles could also be attributed to a drop in manufacturing price. GM hints at this in their press release:

“We have made great strides in reducing costs as we gain experience with electric vehicles and their components,” said [Don Johnson, U.S. vice president of Chevrolet sales and service].

According to the U.S. Department of Energy, battery prices are going down:

...thanks to technology improvements and growing domestic manufacturing capacity, the cost of a battery has come down by nearly 50 percent in the last four years, and is expected to drop to $10,000 by 2015.

The Department says plug-in electric vehicle sales have "tripled from about 17,000 in 2011 to about 52,000 in 2012."  

Still a small part of the overall market, but a growing one.