Ford follows trend-setter Tesla by slashing EV prices as electric competition revs up
More a-Ford-able… Ford is following Tesla down the discount road: the Detroit carmaker said it’ll slash prices of its electric Mustang Mach-E crossover by an average of $4.5K. It also plans to boost production from 78K units/year to 130K. The Mach-E helped Ford become America’s second-best-selling EV maker, with 65K+ electric cars sold in the US last year (trailing Tesla’s 500K+). Recently Tesla also announced price cuts, including slashing its Model Y price tag by up to $13K.
- Less profit: With the cuts, the Mach-E will have a starting price of $46K. The markdowns mean that not all Mach-E models will be profitable on a per-unit basis.
- More saving: Ford expects to offset some of that profit drop with streamlined production and lower commodity costs. FYI: Ford reports on Thursday.
- Ford stock lost 3% yesterday after the news. But investors had reacted positively to Tesla’s cuts, hoping that lower prices would boost sales.
Everyone wants to be an EV player… The markdowns from America’s two largest EV sellers are all about revving up demand as competition booms (partly thanks to subsidies). From old-school players like GM and Toyota to electric-first companies like Rivian and Lucid, carmakers are doubling down on EV ambitions. While the US lags behind China and Europe in electric adoption, full-electric vehicles accounted for nearly 6% of all cars sold in the US last year — up from 3% in 2021.
The trend-setter can be the price-setter… Tesla made EVs cool and spurred electric adoption with its sleek and techy models, setting the standard for electric luxury. Tesla’s also the world’s leading EV maker, and its price moves set a price standard for other EV players. When it cuts prices, other carmakers could feel pressure to do the same to keep demand in check.