Even though many people believe that mass-market penetration is still up to a decade away for the electric vehicle market there have been a number of price cuts in the industry this week. General Motors has cut the price of it Chevrolet Volt plug-in hybrid by $5000, which has prompted an array of discussions across the EV form. There is some debate as to whether GM is ditching the Chevrolet Volt plug-in hybrid as quickly as possible because of slow stock movement or indeed whether the company is looking for a level at which the general public in the US will show mass-market interest.
This is just the latest in an array of price cuts introduced by the likes of Nissan and Honda to name but two others. So what is happening to the EV industry?
Competition, competition, competition
While the sceptics would have you believe that General Motors is dumping Chevrolet Volt plug-in hybrids because of slow stock movement, this does not stack up with the likes of the Nissan Leaf and the Honda Fit, which have both seen price cuts yet remain very popular. It seems as though renewed consumer interest in electric vehicles is prompting some manufacturers to reduce their prices in the short to medium term to find a level at which volume sales will start to kick in.
Whether we see any more significant price cuts in the short to medium term is debatable because after the recent round of reductions there is little more they can do on this front for the moment.
Quote from ElectricForum.com : "Thankfully Honda has responded to the unprecedented demand for the Honda Fit EV which is now sold out across the US. While the vast majority of the vehicles available have been sold in California and Oregon it seems as though demand for this vehicle is moving right across the states."
Tesla holds its ground
While the likes of GM, Nissan, and Honda continue to fight for mass-market appeal it seems that Tesla - and BMW to a lesser extent - is more than happy to remain at the top end of the market, with a luxury Tesla Model S still costing around $70,000. Whether or not we are starting to see a divergence in market strategy between electric vehicle manufacturers remains to be seen but the fact that Tesla is still selling around 1500 Model S vehicles a month at the full price of $70,000 shows there is demand at both ends of the market.
BMW looks as though it will be another of the luxury electric vehicle manufacturers less than willing to reduce prices too much in order to attract volume. When you bear in mind that the likes of BMW have always been sold on their luxury and their status, the reality is that the company would be foolish to undermine this reputation by slashing prices for its BMW i3. It will be interesting to see whether the likes of GM, Toyota and Nissan - to name just three EV manufacturers slashing their prices - regret moving too low too quickly. Conclusion
Slowly but surely, we are starting to see divergence in the EV market with some companies looking for volume at lower prices, while the likes of Tesla and BMW are happy to remain at the luxury end of the market and maintain their status and reputation. It will be interesting to see whether GM, Nissan and Toyota are willing and able to reduce their prices yet further as a means of tipping the balance in favour of volume sales as opposed to luxury pricing.
Who would have thought we would be on the verge of a price war in the EV market so quickly?