After GM bet on a lower price for its Chevrolet Volt, Toyota has raised the ante by dropping the price of its competing Prius plug-in hybrid.
By knocking $2,000 off the base price of the plug-in version of its popular Prius on Wednesday, Toyota Motor Corporation (TYO:7203) now has the first plug-in hybrid electric vehicle (PHEV) on the U.S. market with a starting price below $30,000 —albeit by only $10 and excluding the delivery fee.
In August, General Motors Co. (NYSE:GM) slashed the price of its Volt PHEV by $5,000, to a starting price of $34,185. Earlier this year, both Honda Motor Co. (TYO:7267) and Nissan Motor Co. (TYO:7201) reduced the prices of their all-electric vehicles, the Fit EV and the Leaf respectively.
“We now have nearly two years of history with EV and plug-in hybrid sales, and the results have been disappointing at best,” said Eric Ibara, director of residual values at automotive pricing and information site Kelley Blue Book.
Part of the reason sales of EVs and PHEVs have been slow, besides the fact that gasoline isn’t $10 a gallon (yet), is that the resale value of electric and plug-in electric hybrids is the lowest in the industry thanks to the lack of information about the long-term costs of the batteries that power these vehicles. Early adopters of EVs and PHEVs are more inclined to buy new; it will take time to see how used battery-powered cars will fare in the aftermarket.
But a lower price for a new EV or PHEV means a lower price in the used market, too, which could encourage buyers concerned about how much they can recover of the original sticker price.
“A price reduction on the Prius Plug-In will help to raise the residual values on that vehicle and push it closer to the top of its segment,” said Ibara.
Meanwhile, conventional hybrids seem to have asserted their place in the market. Toyota sold fewer than 8,000 Prius plug-in hybrids in the first nine months of the year, compared to nearly 190,000 regular Priuses in the same period, which suggests the market for PHEVs need a jump-start.
It doesn’t help that the infrastructure for public plug-in stations is severely lacking in most parts of the U.S., especially outside of EV-friendly California.
Here are the U.S. starting prices and electric-only ranges (how far the vehicle can travel on battery power alone before the gas kicks in, based on ideal driving techniques) of the top sub-$40,000 PHEVs:
2014 Honda Accord PHEV, 13 miles, $39,780
2014 Ford Fusion Energi, 21 miles, $38,700
2014 Chevrolet Volt, 38 miles, $34,185
2014 C-Max Energi, 21 miles, $32,950
2014 Toyota Prius PHEV, 11 miles, $29,990