The automaker's new deal means $5,000 cash back on the limited number of '12 Chevy Volts still in showrooms and $4,000 cash back on '13 volt models. This means the price of a Volt—which starts at $39,995—could eventually drop as low as $27,495 once the cash back offer and a federal tax credit are factored in.
(Read More: Shiny Hood Ornament's Not Enough? Light It Up!)
"We made this decision to give our dealers another option for buyers," said Jim Cain, a spokesman for General Motors. GM also offers a 3 year lease on the Volt for $269/month and $2,399 down payment or 0 percent financing for 48 months and $3,000 cash back. Cain said those options did not work for some customers so the automaker rolled out the new cash back offers.
GM needs to spur sales of the Volt since inventory on the extended-range electric car now sits at 140 days. That is more than double the target inventory rate for most automakers of 60-65 days supply.
(Read More: Leasing Hits New Highs, Auto Loans Surge)
Year-to-date GM has sold 7,157 Chevy Volts, a 1.4 percent increase compared to the same time period last year. This year, industry sales in the U.S. are up 7.3 percent.
Earlier this year Nissan cut the cost of a monthly lease on the all-electric LEAF by a third to $199/month. That move sparked a jump in sales of the LEAF and has prompted other automakers to respond with newer, more lucrative deals for their electric cars.
(Read More: Pickups Power May Auto Sales)
—By CNBC's Phil LeBeau. Follow him on Twitter @LeBeauCarNews
Questions? Comments? BehindTheWheel@cnbc.com