Is Chevrolet Taking a Loss on the Chevrolet Spark 2014?

Is Chevrolet taking a loss on the Chevrolet Spark 2014?
Is Chevrolet taking a loss on the Chevrolet Spark 2014?

There is intense speculation in the electric vehicle market this morning with news that the Chevrolet Spark 2014 is being priced at a rock bottom $27,495 on release. Initial estimates suggested it would cost well in excess of $30,000, with some suggesting as high as $33,000, when indeed it is now cheaper than the Nissan Leaf 2013. This has prompted observers to question whether the vehicle, which will be available in Oregon and California, is actually viable going forward.

Looking to the future

A number of car companies have suggested they are making significant losses on their early day electric vehicles, with Fiat admitting to a loss of $10,000 on each Fiat 500E it sells. General Motors, the parent company of Chevrolet, has denied speculation that losses could be as high as $40,000 per Chevrolet Spark 2014 although the heavily discounted price will certainly attract the attention of electric vehicle enthusiasts.

Interestingly, the vehicle is also available for lease hire at a relatively inexpensive $199 a month over a three-year period, with a $999 deposit. While lease drivers are restricted to no more than 12,000 miles per annum this may well appeal to some who travel relatively short journeys and would not exceed the 12,000 mile limit.

Why so cheap?

While there is no doubt that companies such as Chevrolet are very keen to grab the attention of electric car enthusiasts around the world, the fact that this vehicle is only available in Oregon and California should not go unnoticed. These are states of the U.S. which legally oblige automobile manufacturers to sell a predetermined number of electric vehicles (commonly referred to as zero emission vehicles) each and every year. Those who fail to do so will be penalised and forced to acquire "credits" from other automobile manufacturers.

In some ways the electric car industry is in a no-win situation because by reducing the price to below that of the Nissan Leaf 2013, Chevrolet is still attracting negative comment. The fact is that the company, and other automobile manufacturers in Oregon and California, are legally obliged to sell a predetermined number of electric vehicles but they are not forced to reduce the price of such products.

Efficiency savings going forward

Despite speculation that Chevrolet may well be losing anywhere up to $40,000 per Chevrolet Spark 2014 there is no doubt that increased sales and ongoing improvements in technology will bring down the base price of the vehicle. Whether this will prove to be the company's main future profit centre in the electric vehicle market remains to be seen but the company is making the vehicle available at an affordable price even though it is only in selected areas.

As we have mentioned on numerous occasions, there is growing speculation that the vehicle leasing market could well be the key which opens the door to the mass market for electric vehicles. It will be interesting to see the kind of take up for the Chevrolet Spark 2014 and indeed whether optimism turns to realism in the shape of increased electric car sales and greater "acceptability".