Monday, June 18, 2018
Business

Automakers offering cheap leases to jump-start slow sales of electric vehicles

DETROIT — Auto companies are hoping lower lease prices can put a charge into sluggish electric car sales.

Honda announced Thursday that it's slashing the monthly lease cost of its tiny Fit EV by a third, following similar moves by other automakers. Honda also is throwing in other goodies.

With the Fit EV, Honda is offering a $259 per month lease, down $130 from the initial $389 per month offer when the car went on sale in July of last year. The reduced price starts Saturday and will apply to existing Fit EV leases, Honda said. The three-year lease requires no money down and comes with unlimited mileage, free routine maintenance, collision insurance coverage and a free 240-volt home-charging station, the company said Thursday. The charging station normally costs $995. The car buyer must take care of installation.

The Fit EV can go 82 miles on a single charge and gets the equivalent of 118 miles per gallon of gasoline.

Electric vehicles once were billed as the answer to high gas prices and dependence on foreign oil. But U.S. oil production is rising and gasoline supplies are abundant. Pump prices have remained relatively stable the past three years, while gas-powered cars have gotten more efficient, making consumers reluctant to give them up.

There's also the worry that an electric car could run out of juice on longer trips.

As a result, electric car sales are only a tiny fraction of overall U.S. auto sales. Automakers sold just over 12,000 pure-electric vehicles in the U.S. through April, according to Ward's AutoInfoBank and Tesla Motors. That's less than 1 percent of the 4.97 million cars and trucks sold during that time. Even a $7,500 tax credit from the U.S. government that effectively lowers prices couldn't persuade most car buyers.

Automakers need to create a market for the cars among buyers who won't ordinarily go for the latest technology, said Larry Dominique, a former Nissan product chief.

"The early adopters are kind of phased out of the EV market. To get that broader appeal to the EV, they're doing some pretty aggressive lease deals," said Dominique, now an executive with the TrueCar.com auto-pricing website.

On the bright side, cheaper leases and a broader selection of models are giving electric vehicles a boost. Sales for the first four months of this year already are 80 percent of last year's total sales of about 15,000.

The added models, though, have multiple automakers competing for a small number of buyers.

"Although we feel the Fit EV offers significant product benefits over other electric vehicles, in order to effectively compete in the EV market, we need a more competitive price," Honda spokeswoman Robyn Eagles said.

Earlier this month, General Motors said that it would lease the subcompact Spark EV for $199 per month with $999 due at signing as it goes on sale in California and Oregon. Nissan is offering a $199-per-month lease on its Leaf electric car with $1,999 down. That's down from a high of $369 per month back in 2011.

Both the Spark and Leaf leases run for three years but have 12,000-mile annual limits on the number of miles one can drive without incurring mileage charges.

The lower lease prices put an electric car on par with a comparable small car.

Sales of the subcompact Fit EV have been particularly slow. Through April, Honda has sold or leased only 68 in the U.S. Last year it sold or leased only 93, according to Ward's.

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