Incentives Needed to Get Around High EV Prices

Despite being in the midst of a financial apocalypse, California continues to find money to support the sale of electric vehicles. The California Air Resources Board just approved an additional $27 million in incentives to spur sales of hybrid and electric cars and trucks. The car rebates ($2,500 per vehicle) will put the price tag of the Leaf and Volt a bit closer to the price of comparable ICEs.

The high cost of being an early plug-in electric vehicle adopter has been one of the factors limiting vehicles thus far. As shown below, according to Pike Research’s consumer survey data, the optimal price point for selling a PEV where consumers would feel that they were neither too cheap nor too expensive is $23,750, which is $10,000-$15,000 or so less than the current PEV price tags. It will likely take a few years to get there after the cost to the lithium ion batteries (that can add as much as $10,000 to the cost of a vehicle) goes down appreciably.

Tax credits are only one of the incentives that are being used to spur PEV sales, and that is the topic of a session at the upcoming Plug-In 2012 conference in San Antonio on July 23-26 that I’ll be participating in.

For example, California’s granting of HOV lane access to the Chevrolet Volt has prompted a surge in sales in the state this year. Other incentives that are now being used to great effect are providing preferential parking spots, and free or low-cost charging at retail locations or at campus parking lots, such as at the University of Texas. These combinations of incentives are key to driving sales at a local level, and there will be many discussions on this at Plug-in.

Nissan is trying to boost its flagging sales of the Leaf, which sold just 510 vehicles in the US in May, and recently dropped the price of a Leaf lease to under $300 per month. A rebound in sales in June would help the company which plans to begin manufacturing the Leaf in Tennessee at the end of this year. Manufacturing the vehicles and assembling the battery packs locally rather than in Japan should help Nissan in lowering the cost of the vehicles here in the US.

Unfortunately for those down under, the government incentive that could have made the Leaf more affordable for Aussies was terminated, leaving a hefty price tag of $52,000 to drive electric.

Electric Vehicle Price Sensitivity Analysis

Article by John Gartner, appearing courtesy the Matter Network.

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