Strong demand for electric vehicles leaves supplies short

If you’ve been enticed by the recent spate of cheap lease deals on electric cars, good luck finding one.

Southern California dealers are seeing heavy demand for battery-powered cars, now leasing for as little as $199 a month. Fiat’s new 500e has waiting lists even though it hasn’t hit dealer lots. And Honda dealers have already sold out of the Fit EV since a $259 lease was announced Thursday.

The reaction revealed pent-up demand for electric vehicles — as long as the price is right.

Until recently, most consumers have rejected the cars at sticker prices that can be double those of gas-powered rivals, before $10,000 in state and federal incentives. But a lease-price war appears to have brought electric cars to a tipping point, engaging average consumers who shop on price in addition to eco-conscious buyers looking to make a statement.


Three electric-blue Fits sat gathering dust for about three months at Honda of Santa Monica — until Saturday morning, when customers snapped them up and competed to get on a waiting list.

“It’s incredible, especially since we haven’t had any foot traffic or interest in the car in six months,” said Jeff Fletcher, sales manager at Honda of Santa Monica. “I’m not even sure we’ll have enough cars for the people on the waiting list.”

It seems like a good problem for the automakers to have, but surging demand also puts them in an awkward position — especially given the losses they’ll take on the sale of every electric car because of high development costs. Honda and other automakers must now walk a fine line between limiting short-term losses and creating long-term goodwill in a fledgling market, said Jeremy Anwyl, vice chairman of auto information company

“This is basically a government-created marketplace,” Anwyl said, referring to California rules that essentially mandate that automakers build zero-emission cars. “So you see car companies trying to limit their costs associated with meeting these mandates.”

And yet Honda and others have a big marketing opportunity here. “The idea that electric vehicles are desirable — that would be a wonderful notion to get out in the marketplace,” he said. “This is a fine balance.”

Honda had plans to build just 1,100 Fit EVs in this model year and the next combined, releasing them in a trickle to select dealers in select states. It sold only 176 from its introduction in July through the end of May, according to Honda spokesman Chris Martin.

In addition to dropping the lease payment to $259 from $389, Honda eliminated an annual limit of 12,000 miles and threw in a free home-charging station. The lease also offers free collision and vehicle theft coverage, along with maintenance.

“The big question is, did they go overboard? You don’t come up with offers like that unless you really need to,” Anwyl said. “Individual customers get frustrated, but you do create the sense that EVs are hot.... Any time something is hard to get, people want it more.”


Scott Shachter, an optometrist from Pismo Beach, started his futile search for a Fit EV on a visit to Los Angeles on Saturday. He hadn’t the faintest notion of buying an electric car before reading about Honda’s offer.

“It seemed like a no-brainer,” he said. “My wife drives the kids around town in a Suburban. We spend about $500 a month in gas.”

After surveying several dealers, Schachter has little confidence he’ll ever be able to secure the car. “They don’t have the supply, but they still put out this amazing deal,” he said. “It’s disappointing, but I’m not going to get too bent about it.”

Vern Lindholm, by contrast, is quite bent about it. The retired business owner, who lives in Los Feliz, said he was told by salesmen at Scott Robinson Honda in Torrance — near Honda’s corporate complex — that he could come pick up his Fit EV on Sunday. Then he was told later, he said, that no cars were available.


“You can’t say you have cars you don’t have,” he said. “That’s a publicity stunt. It’s called bait and switch.”

Honda confirmed that the Fit EV is essentially sold out in Southern California, but the automaker has no plans to increase or speed up production of the cars, which are made in Japan.

“Even if we wanted to deliver another 500 next week, we couldn’t,” Martin said.

Moreover, Honda has previously had spikes in demand for some vehicles that were not sustained, especially with lower-volume cars such as the electric Fit.


“We are hesitant to roll it out across the country with high volume because we still think it is a vehicle that takes a special person to buy it, someone who is willing to put up with the compromises of limited range and charge time,” Martin said.

Demand for other EVs is strong even before they hit dealer lots. Fiat’s 500e is expected to arrive at Southern California dealers any day now, said Chrysler Group spokesman Scott Brown.

“I’ve heard dealers saying they’ve never seen interest like this on any car,” Brown said. “Some have stopped taking orders because they’re not sure they can fill them.”

Chrysler Group and Fiat Chief Executive Sergio Marchionne never wanted to build the 500e in the first place. Marchionne said the company would lose about $10,000 on every car and complained of being strong-armed by regulators to produce them.


Car companies that have been in the electric car game longer — and have ample supply — may benefit from other automakers’ inability to meet demand.

Nissan first offered its all-electric Leaf in 2011 and has to date invested more than $5 billion in the car, money it hopes to make back through volume sales. The automaker in January cut the Leaf’s entry-level price to $28,800 and offered a $199-a-month lease. Nissan sold 2,138 Leafs in May — a 319% gain from May 2012.

“Our strategy there was to get it in line with a comparable combustion engine vehicle,” said Billy Hayes, Nissan’s vice president for global Leaf sales. “It seems like everybody that is launching a vehicle is following our strategy.”

Demand for the Leaf is strong, he said, leaving Nissan with about 40 days of inventory, tighter than that of its other vehicles.


“This is a volume vehicle for us,” he said. “We are not selling the Leaf to avoid some penalty or meet some regulation.”

Chevrolet started selling its plug-in hybrid Volt, which has a range of 38 miles on electric-only power, in December 2010. In late May, the automaker lowered the monthly lease payment to $269 to compete with the new battery-only offerings.

The automaker has ample supply of the Volt, sales of which are up slightly for the year. Chevrolet is also offering a $199-a-month lease on its all-electric Spark, which hits dealerships this month. Early response appears strong: Dealers have committed to five times the number of Spark EVs that was allocated by Chevy.

“And when the price and lease information was announced,” said John Hughes, Chevrolet’s Spark EV marketing manager, “dealers were asking for even more.”