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General Motors announced today that the Chevy Volt plug-in hybrid will be offered for sale at $41,000, or for a surprisingly low monthly lease cost of $350 per month (with a $2,500 initial payment.) The sticker price for the Volt is $8,200 higher than that of the $32,800 all-electric Nissan LEAF—though the two vehicles’ lease prices are virtually identical.
The Volt’s $41,000 sticker cost doesn’t actually reflect what early buyers will pay for the car—the federal government is subsidizing the price of both it and the LEAF to the tune of $7,500. That brings real price of the Volt down to $33,500. For California drivers in particular though, the economic attractiveness of buying a LEAF versus a Volt is even stronger—the Volt plug-in hybrid isn’t eligible for the state’s $3,000 Advanced Technology-Partial Zero Emissions Vehicle rebate for plug-in hybrids.
When Does a $41,000 Car Cost the Same as a $32,000 Car?
GM says that the apparent disparity between the Volt’s sticker and lease prices is a reflection of the company’s calculation that the vehicle will maintain a very high residual value after three years—significantly higher than that of the LEAF. Even if that is the case, it’s probably more than just a coincidence that the result of that calculation was a monthly lease that matches up so closely to the LEAF’s.
But there also seems to be bit of a hitch in GM’s residual value logic. If electric vehicle incentives are still being offered three years from now, will any original lessees be interested in buying their used Volt when they can get a brand new plug-in for almost the same price?
Remember, the $7,500 federal credit only applies to new vehicles, and is subtracted from the monthly payment of the original lease. That means that whether or not the lessee decides to purchase the car at the end of 36 months, the Volt will effectively come full circle—from a $41,000 car that leases for the price of a $32,000 car, to a used car that resells for the price of a $41,000 car.
It will be very interesting to see how many original lessees actually purchase their Volts—if not many do, General Motors could end up taking a loss on those vehicles similar to what it would take if they had been priced thousands of dollars cheaper from the start.
Reservation Process and Options Packages Also Announced
Beginning today, participating Chevy dealers in launch markets will begin taking orders. Unlike the Nissan LEAF’s centralized ordering system, Volt customers will directly work with local dealers to order the car or establish a position in a waiting list. Customers will be able to track the status of their order via a new website, Getmyvolt.com.
Chevy will be offering rather limited options packages for the car, favoring to standardize as much of the Volt experience as possible. GM’s OnStar navigation system will come standard for five years, and the car’s battery warranty will last eight years or 100,000 miles—one of the primary reasons that Chevy puts its residual value so high.
But in a surprising turn of events that could put a bit of a damper on Chevy’s big news, Nissan has just announced this morning that the LEAF will also come with an eight-year, 100,000-mile warranty. Gamesmanship, anyone?