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Why Automakers are Really Cutting Prices on Electric Vehicles?

CAFE Regulations Pit Electric Vehicles Against Pickup Trucks
CAFE Regulations Pit Electric Vehicles Against Pickup Trucks

There has been a lot of discussion on why electric vehicles sell, or don’t, and what can be done about it. The answer, of course, is to sell more pickup trucks?

In the last year or so, prices of electric vehicles have been dropping steadily. For example, if you can jump through enough hoops, you can get a Fiat 500e in California for the same price, just $199/mo, as a conventional Fiat 500. That’s good news for you, if you are acrobatic, but not such good news for the automaker, who admits to taking a loss on each one they sell. On the other hand, it’s bad news for you, because the same companies that are making the electric vehicles, at least some of them, are finding that people aren’t ready for them, so why put more money into research and development?

Automotive News has one theory, which makes a lot of sense, and it isn’t good news. Now, this only works because of Corporate Average Fuel Economy [CAFE] regulations. In order to sell cars, each automaker must produce and sell a certain number of Zero Emissions Vehicles [ZEV]. The more ZEVs they can sell, the more non-ZEVs they can sell. Electric vehicles, such as the Chevy Volt, Nissan Leaf, and Mitsubishi i-MiEV, count as ZEVs.

What’s interesting is that these very companies also sell pickups. On an individual basis, considering that there’s about nine times the R&D money going into electric vehicles than into conventional vehicles, we can understand why the automakers are concerned but, if you want to sell trucks in California, you have to sell electric vehicles in California. The recent boom in pickup truck sales, related to the surge in the US economy, is putting more money in the pockets of the automakers, which means they can drop prices on their electric vehicles without too much pain in the pocket.

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