Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Ford has reduced its Mustang electric vehicle prices and is driving up production to match Tesla’s announced lead.
Ford Motor Company (NYSE: F) recently increased production while also cutting its electric Mustang Mach-E crossover prices. The Michigan-based automaker explained it would reduce the Mach-E’s pricing by an average of about $4,500, depending on the model. According to reports, the Ford price cut ranges from $600 to $5,900. This reduction compares favorably with Tesla’s (NASDAQ: TSLA) similar preceding price reduction of up to $13,000 on its Model Y.
With these price reductions, Ford could expect to sell its Mach-E at a starting price of between $46,000 and $64,000.
The Ford Mustang Mach-E price development comes weeks after EV leader Tesla cut prices of some EV models earlier in January. At the time, the Elon Musk-led company announced that it was lowering prices on Tesla cars in the US and across Europe. Affected countries include Austria, France, Germany, the Netherlands, Norway, Switzerland, and the United Kingdom.
Tesla’s Model Y currently retails at $53,500 to $57,000 without any options.
Ford Mustang Mach-E Favorable Prices Lauded by Wall Street Observers
Tesla’s price reduction move also significantly drew commendations from Wall Street analysts and investors. These financial denizens applauded Tesla’s strategy as a way to stoke demand and increase sales at the expense of some profit-taking. Analysts also predicted that Tesla’s price cuts on its electric vehicles could pressure other automakers to follow suit.
By following Tesla’s lead, Ford also stands to cede some profit on some Mach-E models in exchange for higher sales. The chief customer officer of its electric vehicle business, Marin Gjaja, also confirmed this assumption. In addition to stating that not all Mach-E models might be profitable on a per-unit basis, Gjaja also provided guidance on production. According to the Ford business executive, production of the electric vehicle line could increase from 78,000 vehicles to 130,000 units annually. On why Ford chose to go this route in terms of a sales approach, Gjaja explained at a media briefing:
“We are responding to changes in the marketplace. As we look and want to stay competitive in the marketplace, we’re having to respond.”
Gjaja also dismissed suggestions that Ford compromised the ultimate goal of making a profit to drive up its EV sales. As he put it:
“We want to make money. Don’t get me wrong, we absolutely want to make money. Believe you me, I know that we need to be trying to get more profitable because we will be publicly accountable for that number.”
In addition, the Ford electric vehicle business chief customer officer also referenced Tesla’s price cuts and the new federal EV incentives.
Existing Customer Mach-E Waitlist to Benefit from Lower Prices Too
Ford pointed out that existing customers awaiting delivery of their Mustang Mach-E vehicles will automatically receive the adjusted price.
Ford looks to counterbalance some of its expected profit shrinkages with cost improvements from the additional production. In addition, the prominent multinational automobile manufacturer also expects to offset lost profit by reducing some commodity costs.
Ford Still Has Considerable Ground to Cover to Match Rival Tesla EV Dominance
Ford’s Mach-E led the company to become the second-best-selling EV manufacturer in the United States last year. However, despite this feat, Ford still trailed supreme EV leader Tesla by a substantial margin. Although Ford sold more than 67,000 electric vehicles in the US in 2022, Motor Intelligence estimates that Tesla sold over 522,000 by comparison.
It is worth noting that Tesla does not report sales by region.