The 2013 Volt.

ChevroletThe 2013 Volt.

In the latest move to make electric vehicles more consumer-friendly, Chevrolet announced it will cut the price of its 2014 Volt by $5,000. The decision comes as Chevy works to keep pace with its chief competitors in the electric vehicle market — Toyota Prius and Nissan Leaf — which are both less expensive and better selling.

“Chevrolet has quickly discovered that when price savings at the pump and ultimately value are your key selling points, a $40,000 cost of entry makes for a difficult hurdle to overcome for most budget conscious consumers,” said Alec Gutierrez, a senior analyst at Kelley Blue Book, in an interview with CNN Money.

The price cut comes, in part, to make sure the Volt shows up in online shopping searches along with the Prius and Leaf, which start at $25,010 and $29,650, including destination fees, GM said. The 2014 Volt will arrive in U.S. dealerships later this month and start at $34,995.

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As Bloomberg reports, “GM loses money on each Volt it sells while not disclosing a specific figure. The model, which is eligible for a $7,500 U.S. tax credit, was introduced in 2010 and has struggled to meet some sales targets. Volt is GM’s flagship car for its efforts to have about 500,000 vehicles on the road by 2017 with some form of electrification.”

“We have made great strides in reducing costs as we gain experience with electric vehicles and their components,” said Don Johnson, a vice president at Chevrolet. “The 2014 Volt will offer the same impressive list of features, but for $5,000 less.”

Among these impressive features is the fact that the car can travel 38 miles on battery power before a gasoline engine engages. The Volt also eliminates the range anxiety that often accompanies 100-percent electric vehicles. According to Green Car Reports, “the EPA says the 2013 Volt’s electric range is 38 miles, and it rates the gas mileage at 37 mpg in gasoline mode — which adds 342 more miles per tank.” And Volt drivers are consistently reporting big savings in their monthly gas bill.

The cost of electric vehicles will likely continue to decline as technology improves and production continues to scale up. Back in May, General Motors CEO Dan Akerson said he has his eye on another $7,000-$10,000 in cost reductions for the Chevy Volt — including a weight reduction of the 3,700-pound car and a switch to a dedicated platform, rather than the use of the gasoline-powered Cruze platform. Akerson said the next generation Volt, launching in 2015 as a 2016 model, will be profitable.

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Despite the price hurdles, the Volt is extremely popular with its owners. At the end of 2012, the Volt topped Consumer Reports’ annual Owner Satisfaction survey for the second year in a row, with 92 percent of Volt owners saying they would buy another.

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