GM Slashes Electric Car Price by 25%

TROY, Mich. — Disappointing sales prompted General Motors on Thursday to slash prices 25% on its landmark electric car, the EV1, introduced in December amid high hopes that it heralded a new pollution-free era for the automobile.

Confronting what it called the car’s biggest drawbacks--the stiff price and motorists’ worries about its limited driving range--GM said it was reducing the lease rate for the EV1 by more than $100 a month and committing seed money for 50 additional charging stations.

GM has leased only 176 EV1s, including just 25 in April, since the sleek, two-seat coupe was introduced in Southern California and Arizona on a lease-only basis. In the last three months, the 25 Saturn dealerships that carry the vehicle have averaged less than one delivery a month.

“We have to get sales up to a more acceptable level,” said Robert Purcell, executive director of GM’s advanced technology vehicles. GM would like to sell 100 EV1s a month, he said.

Company officials said the EV1 has lagged because the $530-per-month cost is comparable to that of top luxury cars, and there are so few charging stations--just 58 at 47 sites--that potential buyers fear running out of juice.

The price drop, to $399 a month, comes as GM is facing its first electric vehicle competition in the retail arena. In two weeks, Honda Motor Co. will begin leasing its EV Plus, a battery-powered hatchback coupe, in Southern California.

Despite the disappointing sales, GM says it remains committed to creating a market for electric vehicles. The company never set a sales goal; rather, it has said all along that its goal was to establish a market niche.

“This is a new market,” said Joe Kennedy, vice president of sales, service and marketing for Saturn. “No one knows what the market size should be or could be.”

Even with an inventory of several hundred unsold EV1s, the company continues to build the teardrop-shaped car at its plant in Lansing, Mich. And it is stepping up marketing efforts in Southern California with print, billboard and radio ads and plans for 50 public ride-and-drive events in coming months.

“There is no lack of commitment,” said John Campbell, owner of three Saturn dealerships in Orange County that have sold 23 EV1s so far--but only one last month. “Everybody thought it would be an instant success. That didn’t happen. It’s just going to take some time.”

But the lackluster sales performance is certain to provide fodder to electric vehicle critics who argue the technology is not far enough advanced and object to the various government subsidies intended to encourage potential customers.

“This just shows that you can lead the public to an electric car, but you can’t make them take the shock,” said Anita Mangels, executive director of Californians Against Hidden Taxes, a coalition of business and taxpayer groups that oppose the state’s mandate for zero-emission autos starting in 2003.

The EV1, with a sticker price of about $34,000, initially leased for $480 a month after government incentives. The buyer also paid for installation of a home charger, which cost another $50 monthly.

The new lease rate of $399 a month includes the rental of the at-home charging station. The lower rate will also be given to all current EV1 owners.

Kennedy said the lower price is designed to broaden the customer base beyond the well-to-do to younger buyers with a technological and environmental bent. “We want to open it up to more people,” he Kennedy.

The EV1 is positioned as a luxury sports coupe featuring cutting-edge technology. The new lease rate will make it competitive with luxury models in the $35,000 range, such as the Lexus ES300.

Given the limited number of potential electric-car buyers, the entry of Honda’s EV Plus could complicate life for the EV1, even though Honda plans to lease only 300 vehicles over the next three years. The four-seat subcompact carries a sticker price of $53,999 and will be offered at $499 a month over three years at four California dealerships.

The EV Plus is powered by advanced nickel-metal-hydride batteries that can get more than 100 miles on a single charge. But Honda says actual range is more likely to be 60 to 80 miles, roughly equivalent to the EV1, which uses conventional lead-acid batteries. The EV1 will switch to nickel-metal-hydride late this year.

Saturn research found that only 22% of potential customers who were deemed serious EV1 candidates have actually decided to lease the vehicle. The main reason they didn’t was price, followed by concern over the lack of charging stations in Southern California.

GM is putting up $250,000 in matching funds to businesses and local governments willing to build 50 new charging stations, roughly doubling the current total.

Developing such electric-vehicle infrastructure is a chicken-and-egg dilemma. Consumers are reluctant to buy battery-powered cars because there are few charging stations, and government and utilities balk at building the infrastructure because there are so few electric cars on the road.

GM hopes to spur creation of a basic network of charging stations throughout Southern California. “This shows our seriousness in developing the [electric vehicle] market,” said Kennedy.

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EV1 Needs a Jump-Start

After an initial surge, General Motors has attracted only a few takers for its new EV1 electric sports car--less than one delivery a month for each of the 26 Saturn dealers handling the vehicle. GM would like to be leasing 100 a month. Here are lease transactions since the car’s introduction:

Month: No. Sold

December: 39

January: 71

February: 24

March: 17

April: 25

Source: General Motors