General Motors is cutting the price of its Chevrolet Volt extended-range electric vehicle by $5,000 for the 2014 model year in the hopes of driving sales higher, even though the company already loses money on every Volt it sells. The announcement of the price cut follows a reduction of $4,000 for the 2013 model year, compared with the 2012 version of the car. The latest cut brings the sticker price down to $34,995 and real cost of the car, including a $7,500 Federal tax credit, to $27,495. The Volt carried an MSRP of $41,000 in 2010 when it debuted.

In California and Colorado, which have state incentives layered on to the Federal credit, the real cost drops even further.

TRANSLOGIC 51: Chevy Volt Real World Test

Volt sales this year are up 9.2% for the first seven months of the year, but that trails a surge in demand for competitors like the Nissan Leaf and Tesla Model S. Leaf sales are up 372% this year after a cut in prices.

Micro-car maker Smart has trimmed the monthly lease price of its Fortwo Electric Drive, or ED, model by nearly a third – while also introducing a new "Battery Assurance Plan" meant to assure the vehicle delivers the promised performance and range as long as it is in an owner's hands. Motorists can still buy the battery version of the Smart Fortwo but the maker is encouraging them to lease the vehicle instead. When the gen-3 ED was launched the maker had priced it at $199 a month – which actually included $119 for the car itself and another $80 a month for the Battery Assurance Plan.

Indeed, there has been an across the board cut in prices of EVs, including the Ford Focus EV and Honda Fit EV, to sell off excess inventory and increase revenue of the vehicles. Nissan, for example, has been able to save by producing batteries in a plant in Tennessee.

The Volt is a plug-in electric vehicle, which means it has a battery that propels the car about 38 miles before a gas generator kicks in to power the battery until the next opportunity to recharge. This approach is meant to quell "range anxiety" among would-be buyers. By having the gas-powered motor, the car will never be stuck for lack of power, as long as there is gas in the tank.

A tank of gas might last a couple of months.
The Volt's 38 mile electric range, compared to the Leaf's 80 to 90 mile range (the Leaf is a 100% EV with no gas-fed range extender), is not thought to be a deterrent for most drivers because statistics show that 78% of commuters travel fewer than 40 miles per day.

For those drivers who are able to recharge their cars at work, a tank of gas might last a couple of months. This theory has been born out in the lives of many actual Volt owners.

If the Volt has a weakness, it isn't the electric powertrain. The pick-up of the electric motor, owing to the terrific low-end torque, makes it a pleasure to drive. The car's design, though, has been criticized by some as being bland, and the backseat is fairly cramped for adult-passengers.

Why do the automakers make EVs if they lose money? New Federal fuel economy regulations phasing in between now and 2025 incentivizes the companies to sell EVs. Washington has been pursuing a policy to support EVs and hybrids through tax credits in the hopes of getting motorists to opt for vehicles that use less fossil fuels.

For those who want to enter the age of electric, or mostly electric driving in the 21st century, Chevy just made it $5,000 easier on the wallet.

David Kiley is Editor-in-Chief of AOL Autos.

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