Chevy Volt vs. Nissan Leaf: the electric car price war

Chevy Volt will sell for $41,000 before a federal tax credit, while the Nissan Leaf will go for $32,780 before the credit. The two cars are trying to jump-start the US electric-car industry.

By , Staff writer

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    General Motors Co. said Tuesday, July 27, 2010, its Chevrolet Volt electric car will cost $41,000 when it goes on sale in November. The price is about $8,000 more than its closest rival, the all-electric Nissan Leaf (pictured here).
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After more than three years of buzz and critics' skepticism, General Motors on Tuesday finally put on sale the Chevrolet Volt – the company's first plug-in hybrid electric car that many say represents GM’s future. The sticker price: $41,000.

That cost is higher than some had expected for a vehicle that can go 40 miles on all-electric battery power before an onboard gasoline engine kicks in as a "range extender" for 300 more miles.

Will consumers bite at a car that costs that much? Some assuredly will – at least initially: GM has legions of wannabe Chevy Volt owners in online and dealer waiting lists at almost any price. But what about a year or two from now, when competitors have electric cars on the road, too?

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"I do have some questions about the long-term market reaction to that sticker price," says Bradley Berman, editor and owner of HybridCars.com, which evaluates plug-in vehicles. "But the news is really the lease, which is very attractive."

Indeed, GM is pushing leasing rather than buying the car. With $2,500 at signing, a three-year Volt lease is $350 per month – making it comparable to the Nissan Leaf, the Volt’s main competitor..

Leasing matters a lot this time around because nobody, not even GM, is sure just how durable or long-lasting the new automotive lithium-ion batteries are going to be. All anyone knows for certain is that they will be costly to replace if they go bad. So a lease deals with that uncertainty – taking the load off the consumer, GM officials say.

For those who want to buy, Uncle Sam is offering a big fat tax credit: $7,500. So the net cost to consumers would be $33,500.

GM is going the extra mile with an eight-year, 100,000-mile warranty just on the battery. The warranties for other parts of the car do not last for that many years.

The Nissan Leaf is an all-electric car that can go 100 miles on a charge, but has no range-extending gas engine. It will lease for $1,999 at signing and $349 per month. The Leaf's sticker price is $32,780, but the $7,500 tax credit brings that down to $25,280.

State tax incentives could lower the price for either vehicle – by up to $5,000 in Georgia and California or $1,500 in Oregon.

For the Volt, production will be limited to about 10,000 vehicles for the 2011 model year, and it will be sold in only six states: California, Connecticut, Michigan, New Jersey, New York, and Texas, plus the Washington, D.C., area. The first deliveries of the Volt will begin in November.

In line with his recent touting of battery technology, President Obama is said to be likely to test-drive a Volt next week in Michigan.

“The Chevrolet Volt will be the best vehicle in its class ... because it’s in a class by itself,” said Joel Ewanick, vice president of US marketing for GM, in a statement at the Plug-In 2010 conference in San Jose, Calif. Bragging about the Volt's range advantage over the Leaf, he added, “No other automaker offers an electrically driven vehicle that can be your everyday driver to take you wherever, whenever."

Not to be outdone, Nissan executives quickly matched GM's battery warranty for the Leaf – and wryly noted that the Volt was a compromise because it still used fossil-fuel engine technology, attendees at the Plug-In conference said.

Such tit for tat is just a hint of the marketing battles ahead, Mr. Berman says. At the same time, they will doubtless tout their environmental advantage over standard gasoline-engine vehicles – as well as their "cool factor," he says.

But GM's strategy, Berman says, is risky because three years from now, the company could be left holding a bunch of expensive Chevy Volts after their leases are over. Will GM be able to sell used Volts at a price that makes money – or be undercut by newer, cheaper entrants to the electrified car market?

Others are less troubled by that potential pitfall.

"Electric vehicles are going to be the dominant automotive technology of the future. All the trends are moving that direction," says Bracken Hendricks, a senior fellow at the Center for American Progress, a Washington think tank. "GM has taken a strong leadership position in this leading electric technology. Even it if takes a loss on its first few vehicles, it's positioned itself extremely well to dominate the market in the long run."

A lot is riding on the Volt's success, both for GM and the US auto industry, Mr. Hendricks says. The Volt is the first entry by an American manufacturer in what is becoming a global race to get electrified vehicles to market. China is moving fast in this direction.

The Volt also represents the fondest hopes of "green hawks" – national-security mavens eager for America to reduce its reliance on imported oil – as well as climate-concerned environmentalists.

"The rate at which the market adopts electrified vehicles will have a lot to do with the price of gas," says Robert Kruse, principal with EV Consulting and former head of engineering for GM's global hybrid development program. "If prices for gas stay low, that isn't good for electrified vehicles that cost more upfront but are less costly to operate. But if you see fuel prices rise, watch out: You'll see the public stepping up."

The Volt can be charged overnight from a standard 120-volt outlet in a garage – or twice as fast if owners pay extra for a 240-volt outlet. The US Department of Energy is working on a program to deploy up to 15,000 home charging stations. Ideally, a Volt owner who lives 20 miles from work would need to fill up at the pump only for longer trips, GM officials note.

Felix Kramer, co-founder of CalCars, started his nonprofit group a few years ago to pressure manufacturers like GM and Toyota into making plug-in hybrid vehicles for the mass market. He and his garage-mechanic colleagues converted a small fleet of Toyota Prius standard gas-electric hybrids into plug-in electric-gas vehicles. They demonstrated the cars could go 100 miles per gallon or better.

"The GM guys are right when they said they've started the world down a different path," Mr. Kramer says. "This is a big day – and the start of something really big and really important."

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