Facing poor sales and an increasingly crowded electric car market, GM is offering increased financial incentives for the 2012 and 2013 model Chevrolet Volt. Potential buyers will now receive a $4,000 rebate when purchasing a 2013 Chevy Volt, or a $5,000 rebate on the 2012 model. In addition, the company has also revised its lease terms: qualified buyers can now sign a 36-month lease at $269 per month with a $2,399 down payment.

GM sold only 1,607 Volts in May and the company has already been forced to pause production on the car twice to sell off existing inventory. The price cut is the latest in a recent line of EV discounts that include the Nissan Leaf, Honda Fit and Ford Focus.

"Clearly some of our competitors have been pretty dramatic in their price reductions," Don Johnson, Chevrolet's vice president of U.S. sales, said during a media conference call last week. "That may be causing some unnatural sales to their products."

The base MSRP for a Chevy Volt starts at around $39,995 before credits and federal tax incentives. While the EV carries a fairly hefty price tag, buyers are definitely getting a good deal on the car. It is more or less common knowledge that GM likely takes a heavy loss on each Volt sold. According to some analysts, the true cost to manufacture one Volt is as much as $75,000. GM has declined to speak publically on the matter.

Unlike other electric cars, the Chevy Volt also has a gas engine that extends its range to that of a conventionally powered vehicle. The Volt's electric battery can power the car for around 40 miles and then the gas engine kicks in until a charging station is available.  

In addition to the new rebate, the Chevy Volt, like most electric vehicles, qualifies for a $7,500 federal tax credit.