General Motors, responding to price competition in the electric vehicle market, cuts the price of its plug-in hybrid to $34,995.

General Motors slashed the price on the 2014 Chevy Volt Tuesday, as it tries to compete more directly with the Nissan Leaf and Toyota Prius.

The 2014 Volt will start at $34,995, a price cut of $5,000 compared to the 2013 model.

The Volt is a plug-in hybrid (GM refers to it as an extended-range electric vehicle or E-REV) with a range of about 40 miles on electric power and another 300 to 350 miles on the range-extender gas engine.

"We have made great strides in reducing costs as we gain experience with electric vehicles and their components," said Don Johnson, Chevrolet's U.S. vice president for sales and service, in a statement.

But that's not the only reason. Nissan has become very aggressive on pricing for the Leaf, an all-electric with a range of about 75 miles. Since Nissan moved Leaf production to the U.S., the price has dropped to $29,650 -- a $6,400 price reduction over the 2012 model.

And it's showing up in sales. In May, Nissan sold 2,138 Leafs, up 319 percent from the same month last year. And, this year to date, Leaf sales have more than tripled to about 11,700 through July from 3,540 in the same period last year.

GM Volt sales are, year to date, at about 11,640.

And Honda is getting into the price-slashing act. That company recently announced a low lease rate for its Fit EV, an all-electric caroffered in California. The Fit EV is being offered for $259 a month for a three-year lease with no down payment, unlimited miles, and included insurance coverage.

Honda is throwing in a Leviton home charging station for the car too.

GM also has to compete with the $25,000 Prius and the more compact Prius C which retails for about $19,000.

"There's increased price competition in the market, whether it's electric vehicles, hybrid vehicles or plug-in vehicles," Michelle Malcho, a Chevrolet spokeswoman, told CNET in June.

That's when GM offered a taste of price cuts to come. In June, GM began offering a $4,000 cash-back incentive on the 2013 Volt and $5,000 the 2012 model.

GM leases many Volts too. And those deals are often more attractive to prospective buyers. For example, on a 2013 Volt with $1,300 down, leases are available for between $235 and $265 a month at dealers in Southern California.