DETROIT (AP) — Auto companies are hoping lower lease prices can put a charge into sluggish sales of electric cars.
Honda announced Thursday that it's slashing the monthly lease cost of its tiny Fit EV by one third, following similar moves by other automakers. Honda also is throwing in other goodies, such as a free home charging station and unlimited mileage.
Electric vehicles once were billed as the answer to high gas prices and dependence on foreign oil. But U.S. oil production is rising, gas supplies are abundant and pump prices have remained relatively stable the past three years, making consumers reluctant to switch from internal combustion engines. There's also the worry that an electric car could run out of juice on longer trips.
As a result, electric car sales, while growing, 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 the same period.
Still, automakers have rolled out new electric models, increasing the competitive pressure.
Automakers generally lose money on electric cars because the technology is so new and the batteries are costly. But they have been subsidizing sales by lowering prices. Chrysler CEO Sergio Marchionne said earlier this year that his company will lose $10,000 on every Fiat 500 electric vehicle it sells. Others have reported similar losses.
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 lease price starts June 1 and will apply to existing 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.
"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 Motor Co. spokeswoman Robyn Eagles said in a statement.
Earlier this month, General Motors Co. 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.
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.