Much like consumer electronics, the price of an electric car seems to drop each year. This is not, however, the story of a new product enthralling buyers and moving into the mass market. No, this is a cautionary tale. Just because you build it doesn’t mean they will come—especially if they’re worried about getting stranded on the roadside with a dead battery.
Ford Motor (F) said this week that it will cut $4,000 from the price of its 2014 Focus EV, the latest in a series of moves by electric car makers to burnish the allure of new plug-in models, which have sold dismally so far. Ford sold 178 Focus EVs in June and only 1,037 the first half of the year. (For comparison, the company moved more than 68,000 of its F-Series pickup trucks last month.) “The new starting MSRP of $35,200 keeps us competitive in the marketplace and is an important part of our commitment to provide customers with a range of electrified vehicles to choose from,” Ford spokeswoman Amanda Zusman said in an e-mail.
Back in January, Nissan Motor (7201:JP) cut the price of its Leaf model by $6,400, a move that pushed the base sticker price under $30,000. In the past, General Motors (GM) has also cut the price for the Chevrolet Volt by nearly $10,000 from the car’s debut at $40,000. “The sales data tell the story of what consumers want,” Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, told Bloomberg News last month. “The early adopters have purchased plug-in electric vehicles, but mainstream consumers have not followed yet.”
Unless you’re a premium brand such as Tesla Motors (TSLA), wooing well-heeled buyers who already own a fancy gas-powered sedan, electric cars are “not a segment that seems to have legs at the prices they were looking for,” says Jeremy Acevedo, a pricing analyst with auto-research firm Edmunds.com. The top-selling electric model last month in the U.S., the Volt, sold 2,698 units—aided by nearly $6,200 in incentives, according to Edmunds.com. The second-ranked Leaf—with 2,225 units sold in June—comes with just under $7,000 in incentives.
The automakers have likely tired of price cuts and incentives to goose sales and will probably turn to more creative marketing measures in coming years, should sales remain anemic. For example, Fiat (FI:IM) is expected to launch its 2014 Fiat 500e with a free loaner car for 12 days each year to allow buyers to drive for their annual vacation without the range worry that comes with an electric car.
The hybrid car market took about a decade to secure a hold in the U.S. and now represents about 4 percent of sales. Acevedo predicts a similar evolution for electric models—especially since no manufacturer wants to be left playing catch-up if and when consumers decide to make the switch. At least nine states have followed California’s lead in trying to get electric, plug-in hybrid, and hydrogen-powered models to reach 15 percent of new-car purchases by 2025. “It looks like the government is in it for the long haul,” Acevedo says. “Hopefully the technology does become more efficient and lets the market grow.”