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Honda slashes EV costs

2013-05-31 08:36

CHEAPER OPTIONS: Honda is one of a few automakers that are hoping cheaper leases will increase EV sales. Image: Honda

TOM KRISHER

DETROIT, Michigan - Auto companies are hoping lower lease prices will put a charge into sluggish electric-car sales.

Honda has announced that it's slashing the monthly lease cost of its tiny Fit (Jazz) EV by 33%; there have already been similar moves by other automakers. Honda also is throwing in other goodies such as a free home charger.

Electric vehicles once were billed as the answer to high fuel prices and dependence on foreign oil but US oil production is rising and petrol supplies are abundant. Pump prices have remained relatively stable in the US for three years and petrol-fuelled vehicles have become way more efficient. A battery car, however, can run flat on an extended trip and take perhaps hours to recharge.

PERSUADING BUYERS

So, sales of electric cars are but a tiny fraction of overall US personal transport sales; only 12 000 pure-electric (battery) vehicles in the U.S. through April, according to Ward's AutoInfoBank and Tesla Motors. That's less than one percent of the number of cars and trucks sold during the same period. Even a tax credit the equivalent of about R75 000 from the US government that in effect reduces the purchase price of such cars is not persuading buyers.

Larry Dominique, a former Nissan Motor product chief now an executive with a vehicle pricing website, said automakers needed to create a market for the cars among buyers who would not usually go for the latest technology. "The early adopters are kind of phased out of the EV market," he explained. "To get that broader appeal they're doing some pretty aggressive lease deals."

The sluggish sales have dampened high expectations for electric car use. US president Barack Obama has said he wants to put a million plug-in electric vehicles on American roads by 2015; with two years to go the nation is way below target but there is hope: cheap leases and a wider range of models are giving electric vehicles a boost. Sales for the first four months of 2013 were 80% of 2012's total sales of about 15000.

Automakers generally lose money on battery cars because the technology is so new and the batteries are expensive but they have been subsidising sales by lowering prices. Chrysler CEO Sergio Marchionne has said his company would lose the equivalent of about R100 000 on every Fiat 500 electric vehicle sold. Others have reported similar losses.

'COMPETITIVE PRICE'

With its Fit EV, Honda is offering a three-year R2600/month lease, down R1300 from the initial R3900 when the car went on sale in July 2012.The reduced price, from June 1, will also apply to existing Fit EV leases. The three-year lease requires no deposit and comes with unlimited use, free routine maintenance, collision insurance and a free 240V home charging station that would usually cost the equivalent of about R9900.

"Although we feel the Fit EV offers significant product benefits over other electric vehicles," Honda said, "in order to compete effectively in the EV market we need a more competitive price."

In May 2013 General Motors said it would lease its Spark EV for R1990/month with R10 000 due at signing. Nissan is offering a R1990/month lease for its Leaf electric car with R20 000 down. That's down from R3700/month in 2011. Both leases have a 20 000km annual use limit before extra charges kick in.

The lower lease prices put a battery car about on par with a comparable normal car.

Sales of the Fit EV have been particularly slow. Through April, Honda sold or leased only 68 in the US; in 2012 it sold or leased only 93. In ideal conditions it can run on battery for 130km.

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