Source: Ford
US legacy car giant Ford has been forced to respond to Tesla’s recent dramatic price cuts in the US – and in international markets – by slashing the price of its own Mustang Mach-E electric vehicle variants.
In the US, Ford’s Mustang Mach-E variants have had price cuts of up to $US5,900, with four of the six variants now pitched below the $US55,000 price cap of Joe Biden’s Inflation Reduction Act, therefore qualifying them for the US government’s $US7,500 clean vehicle tax credit.
Although currently sitting in a distant third place, the Mach-E is considered the biggest challenge to Tesla’s Model 3 and Model Y dominance of US electric vehicle sales.
In a statement Marin Gjaja, Ford Model e chief customer officer said: “We are not going to cede ground to anyone. We are producing more EVs to reduce customer wait times, offering competitive pricing and working to create an ownership experience that is second to none,”
Gjaja went on to say “Our customers are at the center of everything we do – as we continue to build thrilling and exciting electric vehicles, we will continue to push the boundaries to make EVs more accessible for everybody.”
In his analysis of the EV price wars, Morgan Stanley’s Adam Jonas wrote that Ford’s hand was effectively forced by Tesla, which dominates the US EV market with two thirds of sales in 2022.
“It’s no surprise to see competitors follow Tesla’s 13 to 20% price cuts across its Model Y and Model 3 range a couple weeks ago,” he said in a note to client. Ford is the second biggest seller of EVs in the US, with an eight per cent market share.
The price war will certainly do a lot to accelerate the transition with high prices being one of the main barriers to people wanting to make the switch away from petrol and diesel cars.
The price war will also add more pressure on legacy automakers to invest heavily in EV manufacturing in order to reduce costs and scale up volume production.
Tesla’s huge price cuts, which came as a shock to many EV market observers, included a $US13,000 drop in the 5 seater Model Y Long Range from $US65,990 to $US52,990.
Tesla’s industry leading margins enable it to remain profitable at that price while bringing the company’s best seller under the IRA tax credit cap.
Ford has said that it is “significantly increasing production” its flagship electric Mach-E. It sold just short of 40,000 in the US in calendar 2022, well behind the 255,000 Model Y and 199,000 Model 3.
The Ford Mach-E still isn’t available in Australia, however with right-hand drive models now being sold in New Zealand and the UK. It’s hoped that Ford will open up for Australian orders later this year.
Daniel Bleakley is a clean technology researcher and advocate with a background in engineering and business. He has a strong interest in electric vehicles, renewable energy, manufacturing and public policy.
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