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Chevy Volt price slashed. An EV price war?

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Gary Cameron/Reuters/File

(Read caption) A Chevy Volt is charged in Gaithersburg, Md. GM has cut the price tag on its Chevy Volt by $5,000 in an effort to boost sales.

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The Chevy Volt is getting a $5,000 price cut, General Motors announced Tuesday. The move follows other electric carmakers' discounts to spur sales of a product that has yet to win mass appeal.

“Unfortunately, Chevrolet has quickly discovered that when price savings at the pump and ultimately value are your key selling points, a $40,000 cost of entry makes for a difficult hurdle to overcome for most budget conscious consumers," Alec Gutierrez, senior analyst at Kelley Blue Book, said in an e-mailed statement. "After seeing the success that Nissan has enjoyed with the Leaf after lowering prices by a similar amount, Chevrolet decided to follow suit to try and get the Volt out to the masses."

The 2014 Chevy Volt will now start at $34,995, putting it closer to the range of the Nissan Leaf and Toyota Prius Plug-in, which average around $32,000. The Volt will also appear in a lower bracket of price ranges on many popular automotive sites, which GM hopes will give it more exposure to price-sensitive customers.

Nissan used a similar strategy with it's Nissan Leaf and saw a healthy growth in sales. In January, Nissan knocked $6,400 off the Leaf's sticker price and has sold 11,703 units so far this year. That's a 230 percent increase over the same period last year. Now, GM is looking to capture some of that magic. 

“The 2014 Volt will offer the same impressive list of features, but for $5,000 less," Don Johnson, US vice president of sales and service at Chevrolet, said in a statement. “We have made great strides in reducing costs as we gain experience with electric vehicles and their components.”

GM, whose Volt had been handily outselling Nissan's Leaf every year, has fallen behind in this year's sales race, selling 11,643 Volts so far, a 9 percent increase. GM has acknowledged it's losing money on the Volt, but has not disclosed how much. 

The Volt occupies a middle ground in the electric vehicle industry. The car's lithium-ion battery has a range of around 38 miles, after which a gasoline motor kicks in to give the car a total range of 380 miles. The addition of the gasoline motor was in part to ease consumers' anxiety over traditional range limitations of electric vehicles.

The other major obstacle for electric vehicles is cost. In June, GM offered drivers a $4,000 rebate on 2013 Chevy Volts on top of a $7,500 federal tax credit. Tuesday's announcement of a price reduction on the 2014 model signals a continued effort on GM's behalf to appeal to drivers. Electric cars currently make up about 3.8 percent of the total automotive market, according to the Electric Drive Transportation Association. 

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"By dropping the price, we can expect to see GM roll out a far more aggressive lease program, which will make the Volt far more affordable to the average consumer,” Mr. Gutierrez said.

That's not to say electric carmakers haven't had success with high sticker prices. On the luxury end of the spectrum, Tesla Motors has had a strong run recently with its Model S, which starts at around $70,000. The company has exceeded sales targets and earned a variety of accolades from the industry. 

Last month, BMW threw its hat into the electric car race by introducing its first mass-production electric car. Priced at $41,350, the BMW i3 occupies a similar middle ground between luxury and economy. 


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