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Fiat 500E lease deal charges up price competition for electric cars

April 15, 2013|By Jerry Hirsch
  • Fiat is offering a special lease deal for its Fiat 500E, a sign that price competition is starting to hit the electric vehicle market.
Fiat is offering a special lease deal for its Fiat 500E, a sign that price… (Chrysler Group )

There’s nothing like competition to bring down the price of a product, even expensive electric cars.

Chrysler Group said it will be offering a special deal on its first electric car, the Fiat 500e, when it goes on sale this summer.

While the sticker price will be $32,500 before various government incentives, California residents can lease the car for $199 a month, plus tax, and a $999 down payment. It is a 36-month lease.

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“It is a pretty attractive deal to test the waters and see what kind of a take rate they can get,” said Mike Wall, an analyst with IHS Automotive.

Those leasing the car can also get a special $2,500 rebate that California offers for electric cars, which will cover the down payment and about six lease payments. There's also a $7,500 federal tax rebate for buyers of electric cars, but people leasing the cars aren't eligible to collect that incentive.

Chrysler’s aggressive pricing stance comes amid slow sales of electric vehicles since their introduction to the market in late 2010.

“Our task is to simplify the customer’s experience and make sure that people know how easy and affordable it can be to own” the Fiat, said Tim Kuniskis, the former Fiat brand chief in North America. (He was named chief executive of Chrysler’s Dodge brand Monday.)

Earlier this year, Nissan cut the base price of its entry-level electric Leaf S model to $28,800, $6,400 less than the cheapest 2012 Leaf. Nissan is also offering a special 36-month lease deal of $199 a month and a $1,999 down payment.

Carlos Ghosn, global chief executive of Nissan and Renault, told Highway 1 earlier this month that electric vehicle sales are fighting "the head winds” of “price and range anxiety” and that lower prices should spur sales.

Wall said that consumers just aren’t prepared to pay a “price penalty” and “are voting by going with internal combustion cars.” 

Honda is taking a different approach with its Fit EV. Buyers can get a 36-month lease for the electric car for $389 a month and a $389 payment at signing. Like the other deals, this transaction does not include taxes and registration.

But it does come with an additional perk.  The Honda lease includes collision insurance without any deductible. Consumers leasing the Fit will be required to carry liability insurance at $100,000 per incident and $300,000 overall coverage.

Although the amount of insurance savings for Honda's new Fit EV will vary based on a consumer's driving record and address, the option can reduce some of the lease's expense. With Honda picking up the collision insurance on the vehicle, a single man living in a Southern California suburb will save as much as $600 a year, according to some insurance industry estimates.

Electric vehicles “are starting to get priced at a point where you might see more mainstream consumers take the plunge and purchase,” said Alec Gutierrez, an analyst with auto price information company Kelley Blue Book.

While these initiatives start to address Ghosn’s recognition that buyers consider electric cars too expensive, the industry still has a high hurdle in convincing consumers they won’t be stranded on the highway with a dead battery.

“Most consumers are comfortable with the fact that they can go 350 miles or so with a regular car and then always find a gas station,” Gutierrez said. “When you have an electric vehicle that has a total range of about 80 miles, just the possibility that they might run out electricity and not be able to pull over and get some gas turns off many consumers.” 

The Fiat can travel 87 miles on a single charge, according to the Environmental Protection Agency. With the exception of the Tesla Model S, which starts at about $70,000, that’s at the top of the range for electric cars. But it is still just a fraction of a conventional gasoline-powered vehicle.  The Fit EV has a range of 82 miles and the Leaf can go 73 miles on one charge. 

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Follow me on Twitter (@LATimesJerry), Facebook and Google+.

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