Ford is to increase production and cut prices of its flagship electric SUV to remain competitive in the electric vehicle marketplace, just weeks after Tesla’s decision to cut prices for its EVs in the US and Europe.
“We are not going to cede ground to anyone,” Ford chief customer officer Marin Gjaja said. “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.”
Ford’s move for its Mustang Mach-E SUV follows Tesla’s announcement earlier this month that it will cut prices by up to a fifth across the US and Europe to stimulate demand for its cars amid an economic slowdown and increased competition in the sector.
“It’s the start of a price war that Tesla began a few weeks ago, and Ford will sacrifice margins to get more volume” said Dan Ives, an analyst at Wedbush. “Ford needs to be aggressive and not focused on margins in the near term because it’s an EV arms race that’s playing out right now.”
In the US, Tesla in January announced price cuts of up to $13,000 across its entire model range. The company reduced prices on its vehicles in China in October and again in early January. The moves prompted Mercedes-Benz to lower the price of some of its electric models there and also triggered protests from some Tesla customers to protest at the cuts.
The reductions Ford announced on the Mustang Mach-E range from $600 to $5,900, depending on the model and battery; the company said this was to “help reduce customer wait times and to take advantage of streamlined costs to reduce prices across the board”.
Ives said the Mustang Mach-E is a direct competitor with Tesla’s Model Y SUV and Ford’s price cuts were a direct response to those of its EV rival.
Ford said the updated pricing was part of its plan “to keep the SUV competitive in a rapidly changing market” and would strengthen its position as the number-two US EV manufacturer. Tesla ranks first.
Dearborn, Michigan-based Ford also plans to boost production on its other electronic vehicles — a full-size truck, SUV and van.
Ives said he expects more price cuts throughout the year, not just from Ford, but other EV makers.
“There’s a window of opportunity here, where the EV market is about to explode in terms of demand. These automakers do not want to lose customers based on price,” Ives said.
Existing customers awaiting the delivery of the Mustang Mach-E will automatically receive the adjusted price.
Source: Financial Times
