How Much Will Consumers Pay for EVs?

0

Recently many EV observers have been disappointed by pricing for two plug-in electric vehicles. First, the Toyota Prius plug-in announced a price of $32,760 (including destination charge), which is about $3,000 higher than I had hoped to see. Last week, Ford announced the Focus EV price of $39,995 (including destination charge). Again, this price is a disappointment as I had hoped Ford, with its claimed plant flexibility, would be able to provide pricing that matched or bested the Nissan LEAF (a custom EV platform) at $37,250 (SL model). Suddenly, $40,000 for a Volt, CODA Automotive’s $45,000 Sedan and even $57,400 for the more luxurious Tesla Model S do not seem as uncompetitive.

I have said before that the PEV market needs lower prices. The Ford Focus EV, priced at $39,995, is $16,500 above the equivalent packaged gas-powered Focus (Titanium package). With all the power electronics and software (inverter, charger, BMS, etc.), the motor, a 23 kWh battery pack, and Li-ion battery prices of nearly $800/kWh, these costs are not at all surprising. Similarly, the Prius plug-in is priced about $5,400 more than a Prius Four, though these packages are not quite identical. Again, add the power electronics, the 4.4 kWh Li-ion pack, and telematics, and the Prius’ price is about what you’d expect. This increasingly indicates that Nissan may in fact be running a deficit on their LEAF program, despite their assertions to the contrary.

These high prices lead to questions about the viability of PEVs for mass adoption. While some are already speculating on the collapse of the PEV market, it is too early to claim the market as a failure. How will the market make it past the early adopter stage and grow more mainstream? Aside from old-school incentives, there are four main tactics that automakers can pursue:

1) In the very near term (approximately 2012-2013), high residual values and low lease rates in the PEV market will play an important role in attracting consumers;

2) In the near to mid-term (2012-2015), increasing connectivity and other unique features or technologies to PEVs will attract increasingly mainstream interest (Ford’s success with SYNC could be considered proof-of-concept for this);

3) In the mid-term (2014-2016), utilizing PEVs to capitalize on credits towards government regulations for more strict fuel economy and emissions rules (for California Air Resource Board’s ZEV mandate as well as CAFE rules);

4) In the longer-term (2015 and later), the cost of ownership of PEVs will have to become even more favorable with a combination of lower manufacturing costs, lower battery costs, stable electricity costs, and higher petroleum costs.

The disappointment in pricing for PEVs so far seems likely to be repeated as Honda, Hyundai, and VW get in the game in the next two years. While these sticker prices may be tough for some to swallow in the early years, the real test of market sustainability will be prices for 2015 and 2016 model year PEVs. If PEV prices aren’t starting to fall significantly as battery costs begin to flatten out in the mid-$500’s, the viability of PEVs as a mainstream vehicle will be more widely questioned.

Article by Dave Hurst, appearing courtesy the Matter Network.

Share.

About Author

Walter’s contributions to CleanTechies over the past 4 years have been instrumental in growing the publications social media channels via his ongoing editorial and data driven strategies. He is the founder and managing director of Sunflower Tax, a renewable energy tax and finance consultancy based in San Diego, California. Active in the San Diego clean technology community, participating in events sponsored by CleanTech San Diego, EcoTopics, and Cleantech Open San Diego, Walter has also been a presenter at numerous California Center for Sustainability (CCSE) programs. He currently serves as an adjunct professor at the University of San Diego School of Law where he teaches a course on energy taxation and policy.

Join the Conversation