Southern California Honda Dealerships Sell Out of Fit EV Following Price Cut

By · June 08, 2013

Honda Fit EV

It's unclear whether Honda will be able to satisfy demand for the Fit EV from those currently on the waiting list.

The Los Angeles Times reported this week that a recent series of price cuts from automakers aimed at increasing the attractiveness of electric vehicle models has been successful, leading to long waiting lists for the Honda Fit EV and strong dealer demand for cars like the Fiat 500e and Chevrolet Spark.

Last month, Honda announced that it would cut the monthly lease price for its Fit EV from $389, to just $259 per month. The move came after Chevy and Fiat announced sub-$200 per month leasing for their small electric sedans. Less than a week after the announcement, reports began to come in that Honda dealerships were selling out of the car.

This week, a commenter on PluginCars.com claimed to have called five San Francisco Bay Area Honda dealerships in search of a Fit EV only to be told that all 1,100 vehicles that Honda will sell in the United States have been promised to dealers. At the MyHondaFitEV.com forum, commenters claimed to have been told by dealers of waiting lists more than 50 names deep.

"It's incredible, especially since we haven't had any foot traffic or interest in the car in six months," said Jeff Fletcher, of Honda of Santa Monica to the L.A. Times. Fletcher said he was unsure of whether Honda will be able to fully satisfy demand from the names currently on its waiting lists.

Demonstrated Demand for Affordable EVs

Though it is unlikely that Honda or Fiat will turn a profit from their limited-run offerings, the recent surge in demand for affordable EVs serves as a powerful contradiction to voices calling plug-ins a failure. Total sales for the mass-produced plug-ins like Nissan LEAF haven’t yet lived up to initial hopes, but key improvements and a lower starting price for the 2013 edition of the car have boosted sales in recent months to more than four times last year’s numbers.

Interest in smaller EVs like the Fit, Spark and 500e has also been high. According to the L.A. Times, the Spark received five times as many requests from dealers as Chevy can allocate, and some Fiat dealers already stopped taking orders on the 500e.

Not yet three years since the launch of the Nissan LEAF, the starting price of the most affordable EV on the market has fallen by more than $7,000, with the lowest available monthly lease dropping from $350 per month to $199 per month. Buyers are responding. Though it remains to be seen how long it will be before carmakers can turn a profit on an EV priced to compete with gas-powered cars, recent evidence indicates that drivers are increasingly willing to pay the going rate to drive an electric car.

Comments

· · 1 year ago

"recent evidence indicates that drivers are increasingly willing to pay the going rate to drive an electric car."

Actually, no. Buyers are not willing to pay the "going rate", but they are willing to pay a "heavily discounted rate".

The 500e costs $32,500. Fiat says they lose $10,000 on every car sold, which brings the breakeven cost to approximately $42,500. At a generous 50% residual, and 0% lease, that would be a $597 lease payment. Fiat is offering the car for a $199 per month lease, about 1/3 the actual cost. If you use the $32,500 price and $10,000 in Federal and California tax credits, it would bring the lease payment to $306 (generous 50% residual, 0% lease), still 50% higher than what Fiat is offering.

What it does show is there is demand for EVs if the price is low enough, which is encouraging in itself.

· · 1 year ago

I wonder if they would have sold out immediately if Honda offered this deal right from the start or if it's so popular now because of the perceived value of such a heavy discount over the initial offering.

· · 1 year ago

I think @ $249 and unlimited miles, it will more than pay for most people's daily commute cost in gas. If you commute 60 miles per day (for 30mpg), then it is about $8 per day or $40 per week. or $220 per month. In California, the 3 yr lease also qualifty for additional $2,500 state incentive. So, in effect, the Lease is free for 10 month and you only pay $249 for little over 26 months for a 3 year unlimited miles deal. A no brainer.

Now, @$199/month and 12,000 miles/yr, it still makes sense for some people. If you compare it with a 30 mpg/40 mpg car, that is 300 - 400 in gas each year or $1200 or $1600 in gas cost. You also get $2,500 in CA for a 3 year lease. So, in effect, you get to drive the car for 3 years and the first year is FREE. So, your net cost over 3 years is basically $4,800 for 3 years. Equal to a 30MPG car gas money.

Now, many of the owners will NOT otherwise buy it due to various reason.

1. Don't trust the BEV's battery longivity
2. Believe that battery will only drop in prices and better and cheaper choices will be around in 5 years.
3. BEV is still limiting and can't act as only car in the family.

So, those cheap and "subsidized" lease is the best way for people to try them out but can't be sustained in the long term.

For those of us on the sideline, in 2-3 years, there will be so many USED BEV coming back on the market you will be easily to pick one up for a really good price...

· · 1 year ago

I think Honda made a strategic error by dropping the price too far all at once. The problem is that it seems that they cannot take it back because of the way the pricing is structured. Compare this to what Toyota is doing with the RAV4 EV. Toyota is setting a manufacturer's rebate for a set period of time, usually one month at a time. As each period comes to an end, they can evaluate its effect on sales and adjust the amount for the next period. It worked on me - I got one with a $10,000 rebate and 0% 5 year financing. However, in retrospect, if I knew I could get a Fit EV lease for $259/mo I would probably have gone that route. Don't get me wrong, I love the RAV and it's a much more capable car than the Fit, but the new Fit lease is SO much less money.

· · 1 year ago

I agree with MMF. This whole thing is wildly unsustainable. There is no way that these cars will be worth the residual value at the end of the lease, especially given the concerns he lists. For Honda, it doesn't matter since it's a closed-end lease. But for Nissan/GM/Fiat/etc, they will not be able to sell these cars for the residual values they set on them. So they will be forced to sell them at a loss. How long will they be able to take the loss on all of these returning BEVs? I guess we will find out. Unfortunately, unless there is a major breakthrough (always possible), this will eventually put an upward pressure on the price of new EVs.

· · 1 year ago

To begin with, a loss is merely a lesser margin than originally projected, not a cash loss in mfg. 2nd, the "lease end" resales may be refitted with new battery and sold for a higher price, since batteries are the big cost. Also, who knows what new batteries are coming in a few years. The basic E auto I expect may not be that pricey. Still, this is looking better all the time.

· · 1 year ago

The fact that there's a waiting list tells me that the manufacturers aren't *really* interested in selling these cars, or they'd be all about building more to meet demand. That, in itself is not a good sign, since said carmakers are out to make money, and they're likely to drop a money-losing product, just like what happened with the first batch of EVs.

Which is fine for manufacturers like Nissan or Tesla, who are still making a profit at the current prices, but the other guys will just need to cut costs, or they'll be squeezed out of the market. More than likely though, companies like Honda and Fiat will just complain about the cars they're forced to make to meet Californian quotas until the quotas go away and they can finally stop making the electrics. Kind of like last time. Hopefully Nissan makes enough money to keep it going though.

· · 1 year ago

"Which is fine for manufacturers like Nissan or Tesla, who are still making a profit at the current prices,"

Actually, neither is making any money on the car. Even Tesla is NOT making a profit on the car yet. It still has an operational loss. Its recent profit is b/c of the carbon credits and accounting gain due to currency. The operation itself still showed a loss. It is easily determined by looking at its recent filing.

Nissan is NOT making a profit on the car either. At least not yet. And if you take away the $7,500 federal credit overnight, none of the plugins makers, Nissan, GM, Toyota, Ford or Tesla (to a lesser degree) can afford to sell cars/lease them at the current price.

· · 1 year ago

" And if you take away the $7,500 federal credit overnight, none of the plugins makers, Nissan, GM, Toyota, Ford or Tesla (to a lesser degree) can afford to sell cars/lease them at the current price."

The lease is the only time the tax credit comes into the picture for the manufacturers. So, in that respect, you could say that "... cannot afford to lease them at the current price." The Compliance Cars available for sale - Toyota, Fiat especially - are not priced based on costs, but are priced based on the manufacturer's estimation of what the price needs to be to sell the required quantity. The difference between what they actually sell for and the cost to manufacture and distribute is the cost of compliance with the regulations.

I posted the following somewhere else and still feel this way:
"If the compliance cars cost manufacturers $20,000 each above the selling price, then they only have to raise the price of their other ICE vehicles by $158 each. This is 20,000 x 0.79% which is the percentage of vehicles sold in California that must be ZEV."

· · 1 year ago

... I don't feel bad for the manufacturers or feel the regulation is too big of a burden.

· · 1 year ago

@ Mike I.

None of the so called "compliance" car would have moved if there was no $10K incentive in CA ($7.5K fed + $2.5 State). Fit EV and eRav4 demonstrated that through their "discounted" sales number. Take away those discounts, buyers will be even less in numbers. Sure, they can always drop the price more and take a hit in profit.

But it won't work for mass market intended EVs...

· · 1 year ago

I was initially approved @ $389/mo. but decided against it.

after the price dropped I called again but was put on a waiting list. I am indeed in Socal and waiting for one of these beauties.

I actually saw one in Big Bear over the weekend and that big chrome line on the front of the car is fucking blinding.

· · 1 year ago

The car is very expensive. But recent evidence indicates that drivers are increasingly willing to pay the going rate to drive an electric car.

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· · 1 year ago

Not quite - recent evidence indicates that to increase "sales", the going rate needs to drop on electric cars. And most of those "sales" in the industry are likely leases. If you compare the residual set on the leases with the actual resale value if you purchased the car, you quickly realize that the lease prices are BELOW the "going rate" of buying an electric car. It's out of whack and unsustainable, and I only hope that a battery breakthrough is coming soon, or we're about to hit a wall in EV adoption.

· · 1 year ago

Don't extrapolate the demand for these cars to the entire nation just because there is demand in California. The loss in revenue from the price cut is made up in the savings from buying carbon credits. The so called profit that Tesla realized was not from sales of their cars but selling carbon credits to manufactures that did not have EV's ready to sell in California.

· · 1 year ago

atomicdog:
The interest nationwide might not be equal to that in California, but it's almost certainly much higher than sales to date would suggest. California, in many parts of the state, has an ideal climate for EV's. That, along with the compliance rules, helps expain "some" of the greater acceptance of EV's. But once people drive them, in most parts of the country, they like them and want one. Maybe we have to allow the Califiornmia ZEV rules to do their thing, whcih is having the effect of getting more EV's on the road, making more cionsumers aware of the value of an EV. I suspect that before too long that interest wil spread to other parts of the country, by and large. Reduced lease rates have done a lot to get EV's into people's garages. As far as Tesla, they earned those credits, it is not a knock on Tesla that they caused Tesla to be profitable. It's the nature of free enterprise to seek the money, wherever it might be found. They appear to be well on their way to long term profitability, if what they have done to date is any indication.

· · 44 weeks ago

From my personal calculations of driving 66 miles/day, and free charging away from my house. This EV would be an effective monthly cost of $12 over my current situation, which is a 2001 VW Golf ~24MPG that is paid off. That is with gas at $3.60 (2012 Average).

If gas averages $4 over the next 36 months then the Fit EV would be less expensive then the 12 year old Golf.

Pretty nice to move to a brand new car at pretty much $0 change in lifestyle.

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