Prediction: Electric Cars Won’t Be Buzzing in 2012

Here’s a big shock: Electric-car prices aren’t expected to drop this year, despite breakthroughs in technology and production.

If one of your New Year’s resolutions is to go green by making your next car an electric one, resolve yourself: It might cost you more than if you bought it in 2011

According to the Electric Vehicle Consumer Survey by consulting firm Pike Research, “Nissan raised the price of the Leaf for 2012, and while the 2012 Chevrolet Volt will sell for $1,000 less, the car comes without several features that were previously standard but are now options.”

Here’s a story video reporter Jim Robinson did on why not to buy an electric car: check it out, then read on for more…

Electric cars getting more expensive

Usually, the longer a technology is around, the cheaper it gets – think smartphones and flat-screens. So why are electric-car prices moving in reverse of that trend?

“Vehicles on sale in 2012 will not benefit from recent cost reductions in batteries,” says Pike research director John Gartner. “The batteries in these vehicles were ordered before 2012, so any flexibility in reducing vehicle pricing will not occur until 2013 or 2014 at the earliest.”

Pike says the “optimal price” for an electric car – basically, the most that the ordinary consumer is willing to spend – is $23,750. Meanwhile, Pike says the price of a 2012 Toyota Prius PHEV will be $32,000, the Honda Fit BEV $36,625, and the Ford Focus EV $39,995. And federal incentives won’t make up the difference.

The industry website predicts, “In 2012, plug-in electric vehicles will take major strides toward becoming a mature if small component of the overall vehicle fleet.”

Of course, the site made some predictions for 2011 that didn’t quite come true. Like…

The majority of people who drive a plug-in vehicle won’t own it. Thanks to car rental fleets, taxis, and car share programs, getting people into plug-in vehicles will be more influential in the long run than getting them to sign on the dotted line.”

And our favorite, which thankfully hasn’t happened…

Somebody somewhere will have a bad EV experience and the media will overreact. The first time a driver is left ‘stranded’ by running out of charge will be cause célèbre for the doubters to highlight the superiority of gas cars.”‘

None of this, of course, is reason for you to completely ignore electric alternatives. They may not be the most convenient, and they’re definitely not the cheapest transportation. But driving by gas stations without pulling in? Priceless.

Stacy Johnson

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  • Anonymous

    I have a few bones to pick regarding this story.

    1)  Of course neither GM nor Nissan will change their MSRP for the 2012 Model Year vehicles right now.  These MSRP prices were set months ago, along with all the other 2012 Model Year cars they started selling in early fall.  That is how the auto industry works in general.  New Model Years are released in the early fall, and the MSRP is for the most part fixed throughout the entire time that Model Year is sold.  Typically changes in the MSRP come with the next model year, and the Volt and Leaf will likely follow this same industry-wide practice.  The prices for the 2012 MY are old news now.  It isn’t news that the next change in MSRP won’t be until the 2013 model year cars come out.  That is just how the automotive industry works.

    2)   That is NOT to say that the prices people ultimately pay can’t come down if GM or Nissan (or their dealerships) needs to reduce price to sell more units.  They won’t do it through changing the MSRP.  They will do it the same way they always do it with any car mid-year.  The factories will offer limited time cash-back rebates, or they will buy down loan rates to 0%, or they will buy down lease rates.  If individual dealerships need to move units, they will throw in their own incentives completely separate from factory incentives, like push-pull-drag over-valuations of trade-ins, or free service agreements, or below MSRP limited time sales, or just accept lower offers during negotiations.  That is how prices MAY come down in 2012 if production finally catches up to demand, just like every other car GM and Nissan sells.

    3)  This is all moving exactly the same as cell phones or flat screen TV’s.  Nobody saw, or expected to see deep discounts less than 12 months after general release of these original products.  Reductions in MSRP will come over time, just like cell phones and flat screens did.  And just like flat screens and cell phones, better technology will also influence prices.  So while the price of a First Generation Leaf or Volt will drop, some of that price drop will be lost to improved product.  Think of how Smart Phone prices went up compared to flip phone prices, or LED prices vs. LCD or plasma prices.  Some of the price savings will go instead to buying better vehicles, like Nissan’s rumored 200 mile 2nd generation Leaf.

    4)  Pike Research is trying to sell their reports for a profit.  They have a target audience they want to sell to.  They are producing a product that will sell to their target suckers (I mean customers).  Take their numbers with a grain of salt.  They say that car buyers want to pay just $23,750 for a car.  That’s nice, but when they actually get into the dealerships, car buyers are currently actually paying $30,000 on average to buy a brand new car in the United States.  Those are actual purchase price numbers from the manufacturers themselves of what new car buyers are really doing, not some study numbers where folks list off what they would LIKE to pay.  People would LIKE to pay less than $200,000 for a house, but when house buyers actually go out and buy houses, they are paying more than they want to pay in order to get what they want, and are paying closer to $250,000.  Same with this study.  What car buyers would LIKE to pay isn’t all that important an indicator of what they WILL pay.  The $30,000 dollars that the average buyer is already paying now is a much better indicator.  After State and Federal tax credits, all of these cars can be bought in some states for well lower than the $30,000 dollar national average.  Price currently is not the limiting factor for sales, production is.  Price won’t be the limiting factor until production numbers come up. 

  • The Pike Research studies, and this journalist’s opinion, are worth very little in reality. As PrezNixon articulated, the Pike study is seriously flawed.

    Left out of these studies is context. When asked about buying an EV over a gas-burner, the customer is not given any information on why this is a good thing. He is not told that EVs are non-polluting, use only 100% domestic energy that can be made from sunlight or wind, user an energy over which we’ll never have to fight a war, and require virtually no maintenance.

    If the people taking the study are given this information, the numbers change dramatically.

  • Matt M.

    The US Electrical Grid System is so outdated that it’s being held together with bailing wire and duck tape.
    And this is supposed to be way to lessen our dependence on fossil fuel?
    How about the US invest in upgrading our Grid System to the 21st Century before we go piling on more demand than it can already handle.

  • Anonymous

    Paul H.  $30K for a car on average?  I doubt it.  I paid about 23K and 24K for each Prius I own.  My friends who have lots more cash then me often look to a used vehicle to keep it around $20,000.  There are lots of decent models and brand cars one can buy in the low 20’s.  Whoever wrote that the average person pays about 30 grand for a car must be the owner of a dealership looking to encourage higher spending.

  • Anonymous

    I’m always looking at auto ads.  I love cars.  New Camrys, Accords, Chevy mid size cars, Sonatas, and many more are advertised below 25K.  I think that if most people need to shell out 30 K for a new car the industry would tank.  I was just gonna quote ads from todays newspaper but my wife threw it out.  But anyone reading this can look at any newspaer auto section to see what I mean.  Sure, if you want a Lexus, Caddy, Infinity, Maxima, Mercedes, BMW you are likely to pay over 30 K for sure.  But this is not what most people buy.  It may be what they would dream of buying, like myself, but when reality sets in I realize that I’ll do just fine with a new $23K car.  Anyone can do anything with statistics.  Maybe I have just been impoverished and did not realize it with most people paying 30 grand and with financing for 4 years at 6% interest totals $33,818. or $704.55 a month.    The reliable sources ought mention that the median income in the US is about $46,000.  What responsible head of household would spend 66% of their yearly income (assuming they are the half that earns at or below the median) on a car?  I have no doubt that the information you provided was published by your sources but I cant believe that so many people would over extend themselves for a car.  Paul H. (captainclaims)

    • Anonymous

      There are 3 reasons why the numbers don’t add up for you in your mind.

      1)  You are using median incomes for all Americans, but the median American does not buy new cars.  Many Americans buy only used cars, or no cars at all.  New car buyers are a smaller subset of all Americans, and they are older (a median of 47 years old) and have a higher median income (around $65,000 to $70,000/yr).  The $46,000 median income number does not apply to new car buyers, because it does not represent new car buyers.

      2)  The car ads you look at are not representative of actual prices paid.  When dealerships advertise to “Price Point” buyers, they advertise their cheapest models with the least options in order to get people onto the lots.  Once there, they successfully up-sell higher trim lines, and more options.  The prices advertised DO NOT represent the median price of the cars they are selling on their lots.  The cars advertised are a subset of all their cars, and dealers select lower priced cars put in their ads.  Prices in ads also can include rebates and discounts that few people can qualify for (military, returning customer, recent college grad, etc).  If you don’t understand this, the next time you see one of these price leader ads, go to the car dealership’s website and check their inventory of ALL cars of that same model.  I just pulled up an ad for a 17,991 dollar Ford Ranger.  Then I went to their website, and their prices for Rangers went all the way up to 28,715, and the average price well into the mid-20’s.  It would be a mistake to conclude that the median price of a Ford Ranger is just $17.991 by just looking at the price in the ad.  Ad prices do not represent lot prices, or actual prices paid.

      3)  You have done your monthly payment math based upon zero down-payment.  While it is possible to buy a car with zero down-payment, the median new car buyer uses a combination of used car trade-in and cash down in order to afford their median $30,000 dollar new car.  So the median monthly payment is nowhere near $700 a month.

      Hopefully this explains why your back-of-an-envelope calculations don’t match up with the actual real statistics collected from actual sales data. 

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