Will electric vehicle price reductions spread outside the US?



If you follow the electric vehicle market you will no doubt be aware of some significant price cuts over the last few weeks from some of the best names in the automobile industry.

The Nissan Leaf 2013 was introduced in a blaze of glory at a price less than that of its predecessor, the Honda Fit was made available at a very attractively lease price which led to a shortage of vehicles and now we have the Chevrolet Volt being reduced in price by $5000. Are we on the verge of a worldwide EV price war or are these price movements specific to the US market?

There is certainly a difference of opinion as to whether ongoing price reductions in the US market will spread into North America, Europe and the Far East. There is no doubt that the US electric vehicle market is the most important at this moment in time and many experts are surprised at the sudden reduction in prices and the apparent fight for market share.

Is this a real price war?

When you see companies such as Honda, Toyota, Nissan and Chevrolet, to name but a few, reducing the cost of their latest electric vehicles it looks as though we are on the verge of a price war. This comes at a time when the likes of Tesla Motors and BMW are pushing their own luxury electric vehicles at the other end of the market without any price reductions. There are signs of polarization in the EV market with some manufacturers looking to position themselves for the mass market in the future while others remain convinced they offer better value for money with prices relatively unmoved at the luxury end of the market.

There have been rumours for some time that very few electric vehicle manufacturers are making money on their electric vehicle portfolios at the moment. Perhaps with the exception of Tesla, which has seemingly perfected the art of marketing and squeezing maximum efficiency from its operations, the majority of the remaining electric vehicle manufacturers appear willing to take a short-term loss while fighting for their longer term position in the market. This therefore suggests that the ongoing reduction in prices is artificial and possibly manufacturers looking at critical price points, which they will refer back to in the future once the assault on the automobile mass market is underway.

EV prices catch the eye of motorists

Whether or not the ongoing “price war” is real or not the fact is that the ongoing reduction in electric vehicle prices and the introduction of more brands month by month is having a major impact upon the public’s perception of the market. For the first time in many years motorists are now showing an interest in electric vehicle prices and indeed more and more people are now happy to consider an electric car next time they upgrade their automobile.

In many ways this type of promotion, with electric vehicles looking better and better value for money each month, will allow electric vehicle manufacturers to educate the public on the short, medium and long-term benefits of EV travel. It is imperative that electric vehicle manufacturers use this ongoing window of opportunity to maximise exposure and to clear a number of myths which continue to hover over the industry. It will be interesting to see if EV manufacturers do indeed make the most of this opportunity because this could be a once-in-a-lifetime chance to crack the mass market!

What does the future hold for electric vehicles?

As we touched on above, at a stage earlier than many had predicted we are starting to see polarization of the electric vehicle market with some manufacturers looking towards the mass market and others towards the luxury end. This is something which will continue for the foreseeable future and with 2017 earmarked by many as the year when electric vehicles will break into the mass market we can expect to see price competition spread outside of the US into North America, the Far East and Europe.

If you look back at the history of electric vehicles it is fair to say that the opportunities emerging today are unique in every sense of the word for this new mode of transport. In what some may deem to be the perfect storm we have seen ongoing reductions in EV prices, extended government financial initiatives, private sector funding and perhaps the cherry on the cake is the changing image of electric vehicles in the minds of the motoring public.

While we have been here on numerous occasions in the past, this time seems very different and if ever the industry is going to make the leap from niche travel to mass-market appeal, it will be within the next decade.

Sources: PC Mag, CleanTechnica.com, EarthTechling.com

For more information on electric vehicles please visit the Electric Forum where you can discuss your questions and queries with the 5,400 strong community.