Pricing’s Effect on the Expansion of the Electric Vehicle Market
The electric vehicle market continues to grow in the US. While this growth has not been steady, with sales falling 5% from 2014-2015, last year brought about an increase of 37%. Sales numbers like this should only increase manufacturers’ efforts in bringing electric vehicles to the mainstream market, resulting in better and more affordable offerings for the consumer.
The major challenge facing manufacturers is being able to offer a blend of affordability and vehicle range. While there are currently many options out there, many offer a range of 100 miles or less. One manufacturer in particular is leading the charge to offer a long ranging vehicle at an affordable price.
Chevy Bolt Coming to Market
The 2017 Chevrolet Bolt (estimated 238 mile range) is still making its way to dealerships across the country, but early test and sales results look to be promising. Chevy has reportedly sold 3,092 Bolts from January-March 2017. However, the Bolts were only at dealerships in California, Oregon, and several East Coast states over this period of time. These vehicles should be available at dealerships nationwide by the end of September. While the Bolt starts at $37,495, the starting MSRP drops to $29,995 after the Federal Tax Credit is applied. This under $30k sweet spot is where many manufacturers feel they need to be in order to substantially grow the EV market, but sales statistics may tell us otherwise.
Awaiting the Model 3
Being the leader in EV technology, Tesla is the bull of the current market. Their sales numbers continue to outperform the rest, with 10,400 vehicles (6,100 Model S/4,300 Model X) being sold over the same time period (Jan. – Mar.). Something that had been seen as a hindrance is becoming an advantage for the manufacturer. This advantage is in their sales platform. By not utilizing a large network of dealerships/distributors, Tesla has complete control over pricing, and can designate their full attention to pleasing the customers, while other manufactures must also worry about keeping their distributors happy.
There have been reports of Chevrolet dealerships having differing views on how to price the new Chevy Bolt. An AutoWeek report found that two different dealerships in California were charging a $4,439 difference in price for the exact same Bolt. They were only five miles apart. Other dealerships have been selling Bolts at below MSRP just to get them off the lot. These markups/discounts have no bearing on GM’s revenues and only affect the dealership’s profits. However these deviating prices, paired with the fact that dealerships are more interested in selling the higher margin gas vehicles, will only work against the manufacturer’s efforts to cut into Tesla’s market control.
Although there’s currently no competition that can match the Bolts price point and mileage range; that will soon change with the release of the Tesla Model 3 later this year. The Model 3 is expected to start at $35,000 before any incentives, and nearly half a million people have already put down the $1,000 deposit to reserve one. Chevy is using this head start to do whatever they can to convert potential Tesla customers into Bolt buyers. But with vastly different prices being asked for Bolts, and dealerships much more interested in pushing the higher-margin gas vehicles, it may be difficult to make the progress they were hoping for. EV sales will continue to increase over the years, but it will remain to be seen how the market share will play out, especially once these more affordable options hit the marketplace.