With the promised launch next month of the Tesla Model 3, electric vehicles will surely be back in the spotlight as Elon Musk attempts to widen the appeal of his all-EV brand with a more affordable alternative. More than 300,000 people plunked down $1,000 deposits for the chance to buy one of the compact-sized electric, which is promised to cost close to $30,000 after tax credits and other government incentives.
There’s likely to be a lift in the market due to the publicity. EV sales did go up slightly when Chevrolet introduced its Bolt EV, touting its 238-mile range and $37,495 base sticker, which effectively puts it at $29,995 after the $7,500 federal tax credit is applied. According to Inside EVs, through the first five months of 2017, 71,758 plug-in electrics have been sold. That’s on pace to surpass last year’s total of 158,614. But in a market of over 16 million cars, that’s just below 1 percent of total sales.
Even though the numbers are miniscule, the fact is that manufacturers have to sell EVs to meet the zero-emission standards set by the California Air Resources Board and in the 10 states that follow those rules. As a result, there’s a wide range of pure EVs and so-called range extended EVs (plug-in hybrids that use their internal combustion engines essentially as generators to drive the vehicle’s electric motor).
Depending on need, like a high school student getting to class, running local errands or commuting to a train station or nearby office, an EV could be the perfect solutions for a wide swath of buyers who aren’t even considering an EV. A Kelley Blue Book Quick Poll had more than 72 percent responding that they would not consider (52 percent) or are not in the market for an EV (20 percent). Only 10 percent said they would be likely to purchase or lease a pure electric while 8 percent are somewhat likely to consider and 10 percent slightly likely to consider EVs. So, there are plenty of EVs to choose from with ranges varying from under 100 miles to around 300 miles for the most expensive Teslas. But even though there are plenty of options to choose from, not many people taking the plunge. In other words, it’s a buyer’s market for electrics.
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EV bargains
While some of the deepest discounts on electrics are reserved for vehicles sold only in California, manufacturers are pushing hard to move both plug-in and pure electrics by putting some fairly generous incentives into play.
At Ford, the C-Max Energi plug-in hybrid has as much as $14,757 in cash incentives on it, according to AIS, a sister company to Kelley Blue Book under Cox Automotive. The pure-electric 2016 Focus EV has as much as $14,500. Nissan has as much as $4,000 cash back on its Leaf electric. And the 2016 Kia Soul EV is the most heavily incentivized vehicle in that company’s portfolio with a total of $17,300 being offered. That includes $15,000 customer cash, $1,000 bonus cash, $500 off-lease bonus, $400 college student and $400 military money.
VW is looking to clear out its stocks of 2016 eGolfs in anticipation of the longer-range 2017 models that are just beginning to roll into the showrooms. The ’16 models, which have a range of just below 90 miles, are eligible for $6,000 cash back. In addition to the $7,500 tax credit, these incentives nearly cut in half the $28,995 base price. Or you can lease one for $159 per month for 3 years with $2,349 down.
Hybrids, electrics get cheaper
Even before the least expensive Tesla bows, average transaction prices on electrics and hybrids have been dropping according to KBB data. Through May, the Average Transaction Prices on electric vehicles have fallen 7.4-percent versus a year ago, from $40,615 to $37,594. Admittedly, that number is affected by the introduction of the Chevy Bolt, which retails for less than that average and has been selling in decent volumes. Nearly 6,000 have been sold since the first of the year. Also pushing down the ATP will be the various incentives being offered, as in the case of the VW eGolf to clear out older models in anticipation of newer, longer range vehicles coming into the market.
Hybrids have been doing slightly better as a category. ATP has slipped only 4 percent in May, dropping from $26,317 to $25,418 May 2017 over May 2016. Some of these plug-ins are also seeing their share of incentives. Chevrolet is offering 6-year 0-percent financing on the 2017 Volt, while Toyota has $1,000 back or 0.9-percent financing for 5 years on its 2017 Prius Prime Plug-in as well as $2,000 back or 0-percent financing over 5 years for a standard Prius.
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EVs to match regular car prices by 2025
One of the reasons behind the federal $7,500 tax credit for EVs is the disparity in costs between a conventional internal combustion engine vehicle and an electric is due to the higher cost of the battery packs. A study released by Bloomberg New Energy Finance predicts that falling battery prices will make these vehicles more attractive than conventional cars as soon as 2025.
Given that the current Average Transaction Price of new vehicles is $33,261 and these new longer-range vehicles coming to the market are in the high $30,000 range, it’s probably not a stretch to see EVs competing on more equal footing with conventional cars in the not-too-distant future. The battery pack is responsible for nearly half the price of an EV and the Bloomberg unit predicts that costs for batteries is expected to decline by as much as 77 percent between today and 2030. French automaker Renault is predicting total ownership costs of electrics will be the same as gasoline or diesel powered vehicles.
The rundown
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