Are EVs Losing Their Buzz?

Sales of new electric cars and hybrids, according to automotive research and shopping site Edmunds.com, are at their lowest level since 2011 — the first full year of sales for the groundbreaking Chevrolet Volt plug-in hybrid and Nissan's all-electric Leaf. So car makers are paring prices in an effort to get them moving. This comes at a time when motorists who leased those first-generation cars, and have decided not to buy them, are turning them in. They're on dealer lots with still relatively low mileage, and at prices considerably cheaper than the new ones.

Even with $7,500 federal tax credits and other incentives, automakers such as General Motors Co., Ford Motor Co., and Nissan have dropped prices in an attempt to move their new hybrids and electrics. Cadillac became the most recent to reduce the sticker on an electric car, when it whacked $9,000 off its ELR plug-in hybrid last week.

Stable gas prices, fuel-efficient internal combustion engines, continued uncertainty about electrics by some motorists, and the availability of relatively cheap used electrics and hybrids make new ones a hard sell. Yet automakers offer them as part of their effort to meet fleet-wide fuel efficiency standards set by the U.S. government.

Cars with advanced powertrains represented just 2.7 percent of U.S. vehicle sales through the first three months of this year, according to Edmunds.com. That's down one percentage point from a high in 2013 and the lowest quarter since 2.5 percent the last three months of 2011.

Like outright sales prices, lease costs on new electrics continue to come down. GM last week announced zero down and $139 per month for 39 months on the all-electric Chevrolet Spark and lowered the starting sales price on the Spark to under $20,000. Nissan is leasing the Leaf, which starts at about $21,500, at $199. Both include $7,500 federal tax credits and current offers.

The site reports that leases comprised nearly seven of every 10 plug-in cars that drove off dealer lots from January through March.

The unprecedented leasing rates means a steady supply of used all-electric and plug-in hybrid electric vehicles will continue to feed the market in the coming years.

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