Ford Reduces Prices for Electric Mustang Mach-E

Ford Motor Company's stock price fell by 2.07% today.

Ford said it is boosting production and cutting prices of its electric Mustang Mach-E crossover up to 8.8% on some versions. The move comes weeks after Tesla announced price cuts for its Model 3 and Model Y vehicles.

The company has slashed prices on a number of its models. This move is sure to appeal to budget-conscious consumers.

Ford announced that it is cutting prices on its electric vehicles in order to stay competitive in a rapidly changing market. The company said that its supply chain for electric vehicles is coming online, and that it is seizing on streamlined costs to lower prices.

"We are not going to give up any ground to anyone," said Marin Gjaja, chief customer officer of Ford's electric-vehicle business. He added that the company is keeping its pricing competitive and reducing customer wait times.

Ford has announced price cuts for its Mach-E SUV, ranging from 1.2% to 8.8%. In dollar terms, this means a reduction of $600 to $5,900. The Mach-E is a direct competitor to Tesla's Model Y, and was released onto the market in late 2020.

The Mach-E has a starting price of $46,000, but some fully loaded versions can cost over $60,000.

The recent price reduction for electric vehicles is indicative of the increasing competition in this market. In recent years, the electric-vehicle market has grown rapidly, due to both investment from Wall Street and government subsidies.

On Monday, General Motors Co. announced that it had hired Tesla's former head of business development, Zach Kirkman, to lead mergers and acquisitions for the company. GM is deepening its investments in its battery supply chain and looking to shore up other building blocks for EVs by making deals with other companies. Kirkman's hire is a part of this effort.

Shares of Ford were down about 2% to $12.98 in midmorning trading. Tesla shares fell by a similar amount.

After Tesla recently cut prices for some of its vehicles sold in the U.S. by nearly 20%, Ford has announced that it will be doing the same. Tesla's Chief Executive Elon Musk said last week that the price cuts have fueled a surge in orders. The Wall Street Journal reported that the price cuts have angered some customers who missed out by ordering too early. Ford's move comes as a response to Tesla's successful price cuts, and it is hoped that it will lure new buyers.

"Price is a major factor for many people when it comes to buying a Tesla car," Mr. Musk said during an earnings call last week. "There are a lot of people who want to buy one of our cars, but they just can't afford it."

Analysts had been anticipating a response from legacy auto makers to the rising cost of materials. Some of these companies had recently raised prices on their EVs to offset these costs.

Ford announced that customers who have already ordered the Mach-E will automatically receive the reduced price.

"We want our customers to feel confident that they made the right choice when they chose a Mustang Mach-E," Mr. Gjaja said.

Tesla's price cuts have sent shockwaves through the electric vehicle market, prompting customers to rethink their purchasing decisions and putting pressure on competitors such as Ford. On Wall Street, some analysts have suggested that the price cuts were made in response to softening demand for Tesla's EVs. Others have viewed the move as Tesla trying to squeeze competitors by sacrificing some of its strong operating-profit margins - which are larger than most car companies - while also lowering prices enough to qualify many models for a $7,500 federal tax credit.

John Murphy, an auto analyst for Bank of America Merrill Lynch, said Tesla’s markdowns could trigger a price war in the EV market. In a research note earlier this month, Murphy said many car companies are losing money on EVs and will have to seek ways to build these models more efficiently.

"These price cuts are likely to make business even more difficult for automakers, just as they are attempting to ramp production of EV offerings," he added.

Although it still trails Tesla by a wide margin, Ford became the No. 2 EV seller in the U.S. last year. According to market research firm Motor Intelligence, Tesla accounted for about 65% of all electric vehicles sold in the country last year, while Ford’s EV market share was about 7.6%.