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Auto Focus

By Julie Cridler
Senior Market Analyst, IRN Inc.
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There was a great deal of hype and anticipation that preceded the December launches of the Nissan Leaf electric car and Chevrolet Volt extended range electric vehicle. Being the first mass production electric vehicles to hit the market, there was a lot of excitement as well as questions about how they would be received by consumers. So, just how were they received by consumers?

Chevrolet Volt performance

The Chevrolet Volt showed strong numbers in the first month of its launch, with GM reporting that between 250-350 vehicles were sold. In January 2011, 321 of the electric Volts were sold, but that number fell 12.5 percent to 281 in February. The decline in Volt sales is more troublesome when put into the context of Chevrolet’s overall February sales, which increased 43 percent over the same month a year ago. Furthermore, 46 percent of Chevrolet’s February sales were models with 4-cylinder engines. This indicates that consumers are looking for smaller, more fuel efficient vehicles, but passing over the battery electric option.

Year-to-date, GM has sold 928 Volts on a global basis (currently the U.S. is the only market where the Volt is available). GM is projecting that it will sell around 10,000 Volts in total during 2011, and they expect this figure to increase to 35-45,000 in 2012. However, the vehicle has not received all rave reviews thus far. For example a recent review by Consumer Reports magazine concluded that the Volt is not much of a money saver and will be a tough sell to the average consumer. GM plans to have the Volt available nationwide by the end of 2011. Given the high price tag (base price: $40,280 before incentives) and the lukewarm sales figures so far, the 2012 sales projections seem to be a bit of a stretch.

Nissan Leaf sales

In December 2010, Nissan delivered only 10 Leafs to the U.S. market, although near the end of the month there was an additional shipment of 90 vehicles en route from Japan. In January, the sales figures inched up to 87 units, but then fell again to 67 in February. On a global scale, the picture is much brighter. Through the end of February, Nissan reported it had sold 3,657 Leafs globally — far surpassing the global figures for the Volt. The initial deliveries are in response to the 20,000 pre-orders that were received, which Nissan is still fulfilling.

Part of the rationale for the dismal U.S. sales performance is attributable to limited supply. Currently, Nissan builds the Leaf only at the Oppama plant in Japan. The OEM planned to increase production from 2,000 per month to 4,000 per month by the end of March 2011. By 2013, the OEM plans to have capacity in place to build 250,000 Leafs annually. In addition to the Oppama plant, Nissan will also produce Leafs at its Smyrna, Tennessee plant in late 2012, followed by the Sunderland, UK plant in early 2013. While the recent tragedies in Japan have slowed production at the Oppama plant, Nissan reportedly sent out a shipment of 600 Leafs bound for the U.S. the day before the earthquake occurred, so a small supply of vehicles is still available.

Obstacles and incentives

With the intense level of interest surrounding electric vehicles, what is the explanation for the less-than-thrilling sales numbers? And, with gas prices escalating, won’t consumers find electric vehicles more attractive and feasible? The answer to both of those questions lies in the prices associated with these vehicles. There is a significant premium attached to electric vehicle technology at the present time and there are many other options for consumers to choose from that cost less but still offer exceptional fuel economy. Because of the difference in price, consumers will not see an immediate payback in fuel cost savings. Furthermore, with the charging infrastructure in its infancy and the real world range of driving between charges still in question, it is difficult for most consumers to make the leap.

The early sales numbers certainly do not match the marketing blitz that went into these vehicles. With several more battery electric vehicle models launching this year, it remains to be seen if those first to market will continue to decline or be the beneficiaries of another wave of excitement in the electric vehicle market.

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