Competition Heats Up In Electric Cars As Honda Claims Record Mileage

HMC: Honda Motor logo
Honda Motor

Honda Motor’s (NYSE:HMC) new Fit electric vehicle (EV) has been awarded a 118 miles-per gallon (mpg) equivalency by the Environmental Protection Agency, which is higher than that for Nissan Leaf or Ford Focus EV. [1] Competition is certainly heating up in the electric car segment as General Motors (NYSE:GM) recently announced that its engineers were able to increase the efficiency of its Chevrolet Volt and the car would be able to travel 38 miles on a single charge of electricity, an increase of 3 miles from the current version. In another event, Honda’s May sales grew impressively which confirms the Japanese automaker’s recovery from a harsh 2011 is on track.

We have a price estimate of $44 for Honda Motors, which is around 30% above the current market price.

See our complete analysis for Honda stock here

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Cars to be Sold Only Through Leases

Initially, Honda will only offer the car through a lease option, starting at $389 a month. The price for electric cars is much higher compared to its gasoline versions. Honda Fit EV, for example, costs $29,125 after a federal tax credit of $7,500, which is more than $12,000 higher than the gas version. However, the running cost for electric cars is lower than that for gasoline cars. Consumers are hesitant to pay the entire sum upfront, and that is why leasing out such cars makes sense as the increased monthly installments are offset by lower running costs. In addition, it gives users a sense of pride in their contribution toward environmental protection.

The Honda Fit EV does enjoy some considerable technical advantages over its rivals. The claimed mileage, which is equivalent of 118 mpg, is much higher than Leaf’s 99 mpg or Focus EV’s 105 mpg. Moreover, the battery can be charged in less than three hours, compared to 3.5 hours for Focus and 7-8 hours for Leaf. Furthermore, the car can last 82 miles on a single electric charge, which is higher than the corresponding figures for the other two. [1]

May Sales Impress

Honda sales in the U.S. climbed 48% to 133,997  vehicles in May as the Japanese automaker recovered from last year’s tragic tsunami. Car sales witnessed a 54% jump while truck sales grew 41%. Sales were boosted by Civic and Accord, which grew by 82.6% and 74.7%, respectively. [2] As Honda sales rebound this year, we expect a substantial increase in its market share in the North American vehicle market.

Honda Motors, through its joint ventures in China, sold 52,146 vehicles in China in May, an increase of 91.7% y-o-y. The company has sold 261,761 vehicles in the country so far in 2012, up 10.8%. [3]

Understand How a Company’s Products Impact its Stock Price at Trefis

  1. Honda Fit EV: Performance Leader Among Electric Cars?,, June 6, 2012 [] []
  2. American Honda Sales In US Skyrocket 47.6 Percent In May,, June 1, 2012 []
  3. Honda China sales in May up by 92pct YoY,, June 9, 2012 []