Chevrolet discounts Spark EV: 'Cheaper than phone bill'

Against a backdrop of cheap gasoline and ho-hum sales, some shorter-range electric cars are being priced so low that they are competing with some of the most inexpensive conventional cars on the market.

Chevrolet announced on Tuesday that it is dropping the price of its Spark EV electric car by $1,650, the latest in a series of price cuts on models that generally go no more than 100 miles per charge. The Spark EV subcompact is sold in California, Oregon and Maryland.

While the cut leaves Spark at $26,820, including destination charges, federal and state tax credits can cut that as low as $14,995 — only about $2,000 more than the cheapest conventional Spark.

Even more startling: Chevy is offering the EV for lease at $139 a month for 36 months, with no money down."Cheaper than the average family's monthly phone bill," says Karl Brauer, senior analyst at Kelley Blue Book's KBB.com.

Yet electric cars continue to cost automakers substantially more to make, raising questions about how deep a loss Chevrolet parent General Motors (GM) is taking on every Spark EV. .

"They are clearly taking a loss to move product," says Ron Cogan, publisher of the Green Car Journal. "There's a limited market" for electric cars, he says, mostly true believers and those who have short commutes or just need a car to tool around town.

Chevrolet global marketing boss Tim Mahoney, briefing members of the Washington Automotive Press Association in Arlington, Va., Tuesday, wouldn't say whether the car makes or loses money. Instead, he said its "ability to draw new customers to Chevrolet is a major consideration."

He said 90% of Spark EV buyers are new to GM.

Among others cutting prices: Ford last year announced a second price cut for its Focus Electric. Honda also cut the lease price of its Fit EV.

Automakers are forced to take the losses to do business in states that require them to sell a certain number of "zero-local-emission" vehicles. That's a relatively new description, to acknowledge that the utility power plants generating electricity to recharge electrics do create emissions.

"Automakers are doing what they can to get these vehicles out of showrooms and into consumers' hands, including the latest Chevrolet Spark EV lease rates," Brauer says.

Even as it cuts the price to sell the Spark EV, GM CEO Mary Barra announced in January that Chevrolet will move ahead with an EV: the Chevrolet Bolt with longer 200-mile range aimed to sell in the mid-$30,000 range.

GM is looking over its shoulder at Tesla Motors, which plans to add a mainstream-price EV to its lineup to supplement its long-range luxury electrics.

The Nissan Leaf, the best-selling battery car available nationwide, starts at $29,860 including shipping. But it's under pricing pressure, too, as more used Leafs pile into the market.

EV buyers are eligible for a $7,500 federal tax credit. In addition, California has a $2,500 rebate, Maryland, a $2,300 tax exemption. And Chevy will toss in a $1,000 rebate in California, $1,200 in Maryland and $3,500 in Oregon for Spark EV buyers. Not everybody qualifies for all the credits, so the $14,995 figure is a best-case price.

EV owners in California and Maryland also are eligible for high-occupancy vehicle, or carpool lane, access when driving alone.-- "a very important consideration" to many buyers in urban areas, Mahoney said.

In fact, it's one of the key elements Chevrolet considers when deciding where it's worthwhile to sell Spark EV, he said. The others: Likely customer acceptance and recharging infrastructure.