NCPA - National Center for Policy Analysis

Plug-In Electric Vehicles Get Off to a Slow Start

January 4, 2012

Rather than electrifying auto buyers, the plug-in car revolution has had substandard results and lower-than-expected sales.  A year after the first two plug-in electric cars from major makers went on sale, buyers appear put off by the combination of high sticker prices and relatively stable gasoline prices.  When taken in tandem with model-specific shortcomings, these factors have grossly damaged the market capitalization of the new generation of cars, says the Detroit Free Press.

  • While General Motors had hoped to sell 10,000 Volts by the end of the year, it seems it will fall short with just 6,142 Volts having been sold through November.
  • Similarly, Nissan has sold just 8,720 Leaf electric sedans through November.
  • Meanwhile, major competing products such as Toyota's 50 mile per gallon Prius gas-electric hybrids sold at high rates (120,000 vehicles, despite the Japanese natural disasters that interrupted production).

Analysts suggest that competitors continue to grossly outstrip the new electric vehicles primarily because of the associated sticker prices.

  • The Nissan Leaf carries a sticker price of $36,050, while the Chevrolet Volt is priced at $39,995.
  • Despite a federal subsidy in the form of a tax credit for $7,500, the cars are still undercut by competitor pricing; the Volt, for example, compares in size and features with the Chevy Cruze, which starts at about $17,000.

The higher prices, combined with relatively non-volatile gas prices, have limited the splash of the new generation of cars and have held back potential interest among buyers.  Furthermore, the relatively few brands in the sector suffer from model-specific issues.

  • For owners of the Leaf, and other electric-only vehicles, there still are relatively few places to plug in and recharge away from home, limiting use.
  • Meanwhile, the Volt is under the shadow of a government safety probe of why its big lithium-ion battery pack could catch fire weeks after suffering severe damage in crash tests.

Source: Chris Woodyard, "Plug-In Electric Vehicles Get Off to a Slow Start," Detroit Free Press, December 25, 2011.


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