General Motors has announced a $5,000 price drop on the 2014 Chevy Volts coming to showrooms later this year. That gives the car down to as low as a $34,995 price tag.

The Chevy Volt has gained a solid following of fans due to its ability to get 25 to 50 miles of electric-only operation, before its gas engine kicks on to allow drivers to not have to worry about how far they can get on a charge.


So far GM has sold over 51,000 Volts, making it one of the more popular EVs. It has won many design awards and won the hearts of car critics. But the high sticker price has kept it from becoming a common site on main street. The $5,000 lower price for the 2014 model means the Volt is now $34,995. With the federal tax credit for EVs, that brings it down to as low as $27,495. In California, it could qualify for a $1,500 rebate, making it a $25,995 car.

Business Week is fairly unimpressed by the price drop, noting that it allows GM to pass higher CAFE standards (the EPA requires a certain overall mile per gallon target for auto manufacturers. Fail to hit, and fines are imposed. Making sure they meet these balances means manufacturers can aim to sell more fuel efficient cars to offset their SUV and truck sales). This is all true, but what it tells us is… CAFE standards are working.

Business Week also ignores that this price drop has been forecast by GM. The 2011 model Volt was a $40,280 vehicle, the 2012 model was $1,005 less at US$39,995. As GM notes in their press release: “We have made great strides in reducing costs as we gain experience with electric vehicles and their components…” It’s not unreasonable to think that as GM gets better at making the car prices will drop. In fact, GM had announced they expected to drop the price $10,000 by 2014. If it was all about manipulating CAFE standards, they would have kept the $10,000 price drop to keep sales spurred for CAFE standards. Missing the $10,000 mark means they might actually be focused on profit margins.

The real question is: have they dropped the price enough to spur even more growth in the Volt line? Sales this year are not blowing well past 2012’s sales year to date, and there’s a lot of EV competition on the road. A $10,000 drop would have made a mark. A $5,000 might not be enough.