Honda makes its EVs cheap under U.S pressure

Honda unveiled its Fit Electric Vehicle in the U.S market in the month of July last year. Honda had a humble target of delivering 1,100 EVs on a two year lease. However, till May, 2013 the Japanese car major could deliver only 176 EVs. The reason is that the consumers don’t want to pay $389 per month for a Honda EV that can run around only for 82 miles per charge, when the gas powered variant is more fuel efficient with about half the price.

This price factor is a big obstacle for the auto companies, who are being pressurized by the U.S government to sell as many zero-emission vehicles as possible.

Honda Motors’s Fit EV, along with the other all electric vehicles from other manufacturers such as the Ford Focus and Toyota RAV4, are known as the limited-edition models in the auto industry that are produced to cater to the zero-emission sales needs. The Honda Fit EV is available only in car market of California as well as other states which has electric car quotas, where EVs are actually built and dealers are forced to sell them, according to the dealers.

This continuous pressure is making the car makers to try hard to make their EVs more efficient with competitive pricing. The one thing that definitely seem to work is leasing the EVs at attractive prices. As the Honda Fit EV stocks piled up at the dealerships, the Japanese car maker cut down the 36-month lease rate in this month to $259 per month, along with zero down payment and unlimited mileage.

Following this example other car companies, such as GM and Nissan are also offering very attractive lease prices. As a result, the demand for the Honda Fit jumped. Not only the Honda Fit stocks cleared but Honda could not keep up with the demand and had to put its consumers on waiting.

However, though Honda’s Fit EV has become really popular overnight, which would also make Honda meet the EV quotas, the discounted prices may affect the company adversely. Though the Japanese company is not exactly losing money on the EVs but the heavy discounted prices is giving the company very little or no profits.

This condition is faced by the other automobile giants as well who are forced to sell stipulated amounts of zero emission cars, even if the market is not ready to accept such cars, or the technology is not yet affordable. In order to make their situation known to the U.S government, the Alliance of Automobile Manufacturers wrote a petition to the U.S. Environmental Protection Agency to stop California’s strict sales targets of EVs.

The auto manufacturers are trying to make the government understand that it will take substantial time and effort to increase the demand for the EVs. Till there is any other way of pushing the EVs or the U.S government becomes compassionate towards the car makers, Honda as well as its other colleagues will have to dispatch their EVs at throw away price.