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NEW YORK ( TheStreet) -- How do you improve a car that has the highest customer satisfaction rating in the market -- 91% per Consumer Reports? You cut the price, and reengineer the car for the better, that's how.
First, there's a well-publicized story going around that
General Motors'(GM - Get Report) Chevrolet has cut the price of any remaining 2012 Volt models by $5,000, and the 2013 model by $4,000. This looks to me like completely irrelevant non-news. Why?
For starters, the 2012 model was already sold out a long time ago, at least in the country's largest market, California. As of October 2012, I couldn't find a single 2012 model Volt left in stock at any of the California dealers I called.
What about the $4,000 price cut for the 2013 model? Well, that's not news either. Most Chevrolet dealers appear to have been offering between $4,000 and $5,000 off 2013 Volts from time to time, since at least last August. Considering that demand for the Volt was very strong in California in the second half of 2012, when inventories dwindled in the fourth quarter of 2012, the discounts were smaller, approaching zero.
But now they're back again. Why? Clearly, U.S. sales have fallen from over 2,500 per month in late 2012 to close to 1,500 per month so far in 2013. So why have Volt sales fallen? There are five reasons:
1. Tesla(TSLA). The Model S started eating into its large backlog of reservations in 2012, but as of early 2013 you can now get a Tesla within 60 days -- perhaps as little as 30 days -- if you order one now. Some people are clearly willing to pay at least twice as much money for a Tesla, compared to a Volt.
One reason contributing to people buying a more expensive Tesla is that some employers are paying their employees more money if they buy an electric car.
For example, privately held
Evernote pays its employees $250 per month -- $3,000 per year -- if they buy a plug-in car. Employees also get free charging at the office. This disproportionately skews the electric car market to the more expensive models with larger batteries, and of course Tesla is the most expensive EV with the largest battery.