Published - January 31, 2023 @ 10:38 AM (EET)
On Monday, Ford Motor Co. (NYSE:F) said it is cutting prices of its electric Mustang Mach-E crossover up to $5,900 on some versions in response to Tesla (NASDAQ:TSLA) slashing prices on several of its models a few weeks earlier.
Stepping up the price wars in a slowing EV market, the discount comes on a model Ford already deems unprofitable. However, the Dearborn, Michigan, automaker hopes to boost production by 67% this year to offset further margin deterioration.
Chief customer officer Marin Gjaja said the company "are not going to cede ground to anyone," adding that it is keeping its pricing competitive and reducing customer wait times.
PRICE REDUCTIONS
The price reductions for the Mustang Mach-E vary by trim level and performance, with the standard Mach-E now starting at $45,995, down $900 from the former list price.
The high-end Mach-E GT model with an extended range now costs $63,995, indicating a $5,900 price reduction, and, depending on the figurations, the cuts range between 1.2% and 8.8%.
To counter Tesla's plans to cut prices by as much as 20% across its lineup, Ford announced the move, bringing the Mach-E in line with new caps on EV prices to qualify for federal tax credits of up to $7,500 under the Inflation Reduction Act.
More notably, Ford said existing customers awaiting Mach-E vehicle deliveries would automatically receive the discounted price.
WHY IT MATTERS
Ford is investing $50 billion through 2026 to develop electric vehicles and build out its capacity, hoping that improvements to its supply chains and its success in securing batteries and raw materials would help it ramp up profitability.
In recent years, automakers have reported record results amid the tight supply of new vehicles and resilient consumer demand, banking on continued pent-up demand as inventory levels normalize to bypass discounts to move cars.
However, over the last several quarters, Wall Street has been bracing for a "demand destruction" scenario, which means much of its focus this week will be on the automaker's 2023 guidance.
Ford is set to report fourth-quarter results and forecasts after the bell on Thursday. Shares of the automaker were down about 1.5% to $13.06 in morning trading Monday.
