You've probably been behind one at a red light, wondering where the exhaust pipe is, and you've likely seen a commercial for one on TV. Though many consumers are somewhat familiar with electric cars, U.S. car buyers have been slow to embrace these vehicles. Fortune reports that in 2014, U.S. consumers bought 119,710 electric cars and plug-in hybrids, representing less than 1 percent of the 16.5 million vehicles that were sold in the U.S. last year.
The lack of familiarity with electric vehicles leaves potential buyers with plenty of questions about driving range and charging times, as well as concerns about cost and maintenance. What kind of warranties do electric cars have? How do electric cars compare with other cars in terms of cost? Automakers are trying to calm shoppers' concerns about buying EVs with longer warranties for the battery pack, as well as dropping the price of the vehicles themselves.
Chevrolet said Tuesday it is lowering the base price of the 2015 Spark EV from $26,820 to $25,995, which is less than the 2015 Nissan Leaf's starting price of $29,010 and the 2015 Ford Focus Electric's base price of $29,170. These prices don't include any state or federal tax credits or manufacturer incentives. The Spark EV will be sold in Maryland starting mid-year and is currently on sale in California and Oregon. The Nissan Leaf is available nationwide and Ford says its Focus Electric is available at more than 900 dealerships in the U.S.
Tim Mahoney, chief marketing officer, Global Chevrolet and Global GM marketing operations leader, says that there are some hurdles keeping shoppers from choosing an electric car, like a lack of charging infrastructure, driving range and affordability.
Chevrolet is trying to clear the affordability hurdle and attract more buyers to its Spark EV with low monthly lease payments. On Tuesday it announced a new lease deal on the 2015 Spark EV of $139 a month for 39 months with $0 due at signing, which is good through the end of April. Nissan's April lease deal on the 2015 Leaf is $199 a month for 36 months with $2,399 down, and Ford is offering a lease deal through early July on the 2015 Focus Electric of $149 a month for 36 months with $3,293 at signing. Not only is the Spark EV lease payment lower than the payments for the Leaf and Focus Electric, but with no down payment and a three-month longer lease, it's a much less expensive lease than the other EV lease offers.
"I think leasing as a device to acquire your transportation is part of a shift in the way consumers think about their transportation expenses," Mahoney says. "It's a little bit like allocating x a month to your phone plan or to your Hulu subscription." He adds that the Spark EV's low lease deal is meant generally to "cast the net a little bit wider" when looking for potential buyers. Mahoney says that about 90 percent of Spark EV buyers are coming from a non-GM brand.
There are a variety of factors that draw shoppers to electric vehicles, Mahoney explains, like the environmental impact, fun-to-drive performance, technology and being able to drive in HOV lanes. The price of EVs is generally much higher than a comparable gas-only vehicle though, which may deter many shoppers. For example, the Ford Focus Electric costs $12,000 more than the gas-only Focus. Leasing can be a good low-risk way to get into a vehicle you may not be sure if you want to keep for an extended period of time because at the end of the lease, you simply turn the car back in.
Jeff Schuster, senior vice president, forecasting at LMC Automotive, a company that provides forecasts of automotive sales, production and powertrain information, says, "The new incentives on EVs certainly reflects the current environment of low gas prices. EV sales are struggling so moves like this are a way to nudge consumers toward EVs. It's all about cost vs. benefit for consumers. The side benefit is that a short lease does take some of the durability risk (or concerns) out of the equation. The reality for EVs is that as long as gas prices remain low, it will be an uphill battle for sales."
Jessica Caldwell, senior analyst and director of pricing and industry analysis for Edmunds.com, agrees that automakers are having a hard time moving EVs off dealer lots. Caldwell says, "Green cars are currently in a sales slump. Offering an attractive lease deal will certainly stimulate interest for the Spark EV. … Chevrolet needs to do something financially motivating for buyers since these cars are not selling on their own. With low gas prices and green cars becoming more mainstream, it seems like the American public has lost some of its fascination with these vehicles."
If you're considering an electric car, would a short-term lease with a low monthly payment convince you to pull the trigger?
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