Plug-In Price War: $6,000+ Price Cuts on Nissan Leaf, Toyota Prius EV

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Electric cars such as the Nissan Leaf and Toyota Prius Plug-In began 2013 with a sales slump. In the months ahead, automakers hope to boost sales with increased production and cheaper prices.

A few weeks ago, Reuters noted that only 650 Nissan Leafs were purchased in the U.S. in January 2013, compared to around 1,500 sales per month in October, November, and December. Sales of the Toyota Prius Plug-In have also been muted in early 2013, with 874 purchases in January, down from 1,361 the month before.

February was another weak month for Leaf sales, with 653 purchases. Among the many factors cited as reasons for slowing plug-in sales, both Toyota and Nissan point out that it’s not entirely due to lack of demand but problems with supply. In other words, there simply haven’t been that many vehicles available for sale on dealership lots. That tends to hurt sales.

That issue should be remedied, at least by Nissan, which expects to ramp up production of the Leaf in its Tennessee plant in the near future. The plant hasn’t come close to reaching full production capacity yet. There’s also the simple issue of price: Nissan and Toyota know they’d sell more plug-ins if the initial prices were lower—on par or at least in the vicinity of similarly equipped gas-powered cars. That issue too is being remedied by the automakers.

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In mid-January, Nissan introduced a cheaper Leaf for 2013. After incentives, the pure battery-powered vehicle can start at a very competitive price of around $19,000. That’s $6,400 less than the previous cheapest model Leaf.

Now, Toyota has announced that it is also dropping the asking price of its plug-in commuter vehicle, with cash-back incentives amounting to discounts of as much as $6,500, reports Wards Auto.

The Prius Plug-In outsold the Leaf in 2013 by a score of roughly 13,000 to 10,000. Still, Toyota faces a difficult task in convincing the public that its plug-in is a smart buy. After all, the Prius Plug-In competes directly not only with other plug-ins like the Nissan Leaf and Chevy Volt, but with the rest of the exceptionally fuel-efficient Prius family. The Prius c, which runs on regular gas and averages 50 mpg, starts at around $19,000. Depending on one’s driving needs, it could be a more practical and cost-effective choice than the Prius Plug-in, which starts at $32,000 and can be driven 11 miles using just battery power. After that, it’ll still get 50 mpg in normal hybrid mode.

Last summer, a Wall Street Journal reporter compared the regular Prius to the plug-in version, wondering whether the latter was truly worth roughly $10,000 extra. “Even if you never put gas in your Prius Plug-In it would take years to ‘break even’ based on savings,” the report noted.

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Now, however, according to Wards Auto, because all electric cars are vying for consumer attention in a very “competitive niche segment,” Toyota has found it necessary to pump up rebates on the Prius Plug-In. The result is that the price difference between it and a regular Prius can now be a lot smaller than $10,000. Incentives vary depending on location, but in New York City, buyers can get $6,500 off a 2012 Prius Plug-In, or an instant cash discount of $4,650 off a 2013 model. By contrast, Toyota offers $0 cash back on the purchase of a Prius c.

Even with large discounts on Prius Plug-Ins, Toyota’s sales 2013 goals for the model are modest. In fact, the automaker expects to sell fewer of the vehicles than it did last year. Executives anticipate that around 12,000 Prius Plug-Ins will be sold in the U.S. in 2013, roughly 1,000 fewer than during its debut year of 2012.

Nissan, by contrast, expects Leaf sales to rebound after a slow couple of months in early 2013. The automaker anticipates averaging 1,500 sales per month in the U.S. very soon, with total sales projected to rise by 20% this year.