Sunday, October 13, 2013

Ford to drop price of 2014 Focus EV

Ford Motor Co. is the most recent automaker to slash the price of its electric model in an attempt to win over mainstream buyers who have been slow to embrace pricey EVs.
Ford will drop the price on its struggling Focus EV by $4,000 for the 2014 model year. The news comes less than a month after a Ford executive said the automaker would not chase price cuts made by competitors.
"It's a price war," Karl Brauer, senior analyst at auto research firm Kelley Blue Book, said Wednesday in a telephone interview. "Incentives have a certain amount of swing, but when people hear a price, that's what sticks."
About 41,000 battery-electric cars sold in the United States through June of this year, accounting for a tiny half-percent of all new cars and trucks sold. Incentives and price cuts have led to a 385 percent increase in sales during the first six months of 2013 compared to the same period last year.
The revised base price for the Focus EV is $35,200, which is down from $39,200. That's still more than $6,000 above Nissan Motor Co.'s Leaf, the most comparable competitor in the electric car segment. Ford, in a statement, said the lower price "keeps us competitive in the marketplace."
Factoring in a $7,500 federal tax credit, a customer could now buy a Focus EV for $27,700; in California, where most Focus EVs are sold, that cost is $25,200 after that state's $2,500 credit.
Last month, Nancy Gioia, Ford's director of global electrification, said the automaker would not match hefty price cuts by competitors.
"We're not going to chase down to the lowest price possible -- that doesn't make sense to erode the brand image or the true value of the product," Gioia said at the time.
Ford's price cut comes as some automakers, most notably Nissan and Honda Motor Co., have slashed prices on slow-selling electric cars.
And General Motors Co. is widely expected to cut the price on its 2014 Chevrolet Volt range-extended plug-in. The Detroit automaker is offering $4,000 cash off the 2013 Chevrolet Volt through Sept. 3, which lowers the price of the plug-in hybrid $35,145.
It also is offering zero percent financing for qualified buyers; the offer includes $2,000 cash off the normal starting sticker price of $39,145. The deal, through Sept. 3, is for $473 a month for 72 months, with $3,999 down.
GM is offering a $269 monthly lease for three years with $2,399 due at signing. The lease deal expires Sept. 3.
GM plans to release 2014 Volt product and pricing details in mid-August, as production on the 2014 model is expected to begin, said GM spokeswoman Michelle Malcho. She declined to comment on whether GM will reduce the price.
GM's Chief Financial Officer, Dan Ammann, told The Detroit News this week that when technologies are first introduced, they are expensive. But as technology matures, he said, the cost typically comes down.
"From our perspective, it gets back to what is the customer willing to pay for, what's the value proposition that makes sense for them, making sure that we can deliver a vehicle whether it's in that segment or any other segment that gets to the value proposition that makes sense for the customer," Ammann said. "How electrification plays into broad-based consumer acceptance, I think that is still an unanswered question."
Sales of Nissan's all-electric Leaf have spiked since the Japanese automaker dropped the base price by 18 percent to $28,800 for the 2013 model year; the car is eligible for a $7,500 federal tax credit. Nissan also added extra cargo room, and for higher-end trims, an on-board charger that reduces electric charging times by half.
And Honda Motor Co. said in May it will pare the monthly lease price of its Fit EV from $389 to $259 a month and reduce by $130 a month the cost of existing Fit EV leases. The lease will now come with unlimited mileage.
The News reported last month that Ford planned no base vehicle changes for the new Ford electric vehicle, an unusual strategy for an automaker that often tinkers yearly with vehicle packages and options.
The price drop is significant, but incentivizing the Focus EV to boost sales is nothing new. Ford has offered heavy lease discounts of more than $10,000 and has offered $2,000 off the base price for cash purchases.