Given what you have learned in class read the article “Electric vehicles in short supply” and give your assessment as to why the supply of electric vehicle is running low. Cite specific examples that explain why this is occurring and describe why do you think the suppliers are behaving in this manner? Finally, do you agree with the supplier’s actions, why or why not?
Electric vehicles in short supply
Lease-price war spurs a run on battery- powered cars. Some sell out in Southland.
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 dealers have waiting lists for the new 500e even though the car hasn't hit their lots yet. 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 Edmunds.com.
"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. "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 maintenance and collision and vehicle theft coverage.
"The big question is, did they go overboard? You don't come up with offers like that unless you really need to," Anwyl said. 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 hope of getting the car. "They don't have the supply, but they still put out this amazing deal. 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 Scott Robinson Honda in Torrance that he could come pick up his Fit EV on Sunday. Then he was told later, he said, that no cars were available.
You put enter comment then you publish it big dawg
ReplyDeleteAfter having extremely low sales Honda decided to make less electric cars to avoid wasting money on cars that just sit there. They then made a deal that " revealed pent-up demand for electric vehicles -- as long as the price is right." They now have the problem of not having enough cars to sell. The suppliers should have either raised the price or produced more cars to meet the demand.
ReplyDeleteThe supply of electric vehicles is running low because of the great deals they're having, "...now leasing for as little as $199 a month." The suppliers are suddenly desperate. They want to get this car, that hasn't sold for months, to finally sell. What better way by giving an insane deal that you can't pass up! Yes I agree with what the suppliers did. It's a business, you have to get people to buy what you're trying to sell.
ReplyDeleteThe supply of electric vehicles is running low is because big vehicle companies, like Honda, are basically giving their electric cars away. As Jett Fletcher said, "[Honda] isn't event sure if they have enough cars for people on that waiting list. On the other hand, Honda's unbeatable prices, along with the cheap $199/month lease, causes Honda to loose more money than tier making. As Anwyl said,"did [Honda] go overboard? You don't come up with offers like that unless you need to," stating that Honda was basically in a desperate position.
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ReplyDeleteThe reason why the supply of electric vehicles is running low is because the have made them more desirable by lowering the price and making the cars more desirable.
ReplyDeleteThey made it more desirable by "dropping the lease payment to $259 from $389", "eliminating an annual limit of 12,000 miles and threw in a free home-charging station." Also "The lease also offers free maintenance and collision and vehicle theft coverage."
I think the suppliers are behaving in the manner because they wanted to sell the cars they had had for over 6 months.
I do not agree with the suppliers actions because they did not think the the price drop and the other offers would attract more customers than cars. "Vern Lindholm... is quite bent about it.. he was told... that he could come pick up his Fit EV on Sunday. Then he was told later, he said, that no cars were available." That is one customer who was not satisfied because they did not have enough supply for demand. & I'm sure there were many others.
I believe that Honda's decision to allow more "kits", to be pumped out due to increased demand for a set of items worth more than they'll receive in income from the Fit EV, is a completely idiotic move. If they wished to allow only a few to be cheaper to allow word-of-mouth to play it's role, then they would've been doing the ingenious thing. However, they decided to instead, produce more cars; which is moronic, due to the small amount of income that will be generated from these lender cars with full-blown kits including insurance, theft replacement, and charging docks, as stated *here*:
ReplyDelete"In addition to dropping the lease payment to $259 from $389, Honda eliminated an annual limit of 12,000 miles and threw in a free home-charging station. The lease also offers free maintenance and collision and vehicle theft coverage."
This whole situation could've been circumnavigated if they raised the prices back to normal, therefore allowing word-of-mouth to come into play, and a little, to no loss, as is also stated *here*:
"It seems like a good problem for the automakers to have, but surging demand also puts them in an awkward position -- especially given the losses they'll take on the sale of every electric car because of high development costs."
What I have understood for this article is that they had a car that they haven't been selling for a while. As in a while I mean like a good couple of months since they have sold. So what they did was that they started to give a great deal that people wouldn't be able to pass up when it is givien to you when you are asked the deal. The deal was that "leasing for as little as 199$ per month". I mean of it was me I wouldn't pass up that deal.
ReplyDeleteAfter having such low deals Honda started making lees electric car so they won't waste money.the deal was great it was as low as$199 if that were me I would do that to.
ReplyDeleteAfter reading this article I can see that electric vehicles aren't in high demand as compared to gas vehicles. The reason why the supply of electric vehicles are running low is because to some people the price is too expensive. As stated "Until recently, most consumers have rejected the cars at sticker prices that can be double those of gas-powered rivals" meaning that electric cars are expensive.
ReplyDeleteThe reason they begun to run low on them is that clever marketing made them more desirable by lowering the price of them and making the leases for them more then affordable.
ReplyDeleteElectric cars are "efficient" and saves you money on gas. Maybe the vehicle companies don't want to make more vehicles for the people who are on the list and have a demand for because before the big sudden demand for electric cars came along nobody was buying these vehicles and the car companies know that if they construct them some people will end up not buying them and they'd be left thee to gather dust and it would be a waste of useful resources and I believe holding back on making them is a good idea due to the over abundance of motor vehicles in today's world.