The Mach-E price reductions follow Tesla’s decision to cut prices on its own vehicles — including the Model Y, a direct competitor to the Mustang Mach-E — by as much as 20%. In a statement announcing its moves, Ford said it wasn’t willing to “cede ground” to Tesla or any other competitor.
The cuts come as a turnaround for the EV market, which had seen big price hikes over the past year, largely reflecting the increased costs manufacturers have faced for critical raw materials, such as the lithium, cobalt, and nickel used in lithium-ion batteries. But the industry is getting some “breathing room,” according to Sam Abuelsamid, principal auto analyst at Guidehouse Insights, as costs for those minerals have begun coming back down.
Growing EV Demand
Increasing volume should also help drive down the cost of building the Mach-E by improving economies of scale, several analysts pointed out. Ford didn’t release a production target for the electric Mustang, but it sold 39,458 last year — a figure limited by production capacity at the Cuautitlán Izcalli, Mexico, factory building the EV. Based on Ford’s internal numbers, a well-placed insider said the goal is to boost output to 115,000 this year and 166,000 by 2025.
Ford also has begun taking steps to boost production for its second long-range battery-electric vehicle, the F-150 Lightning. It originally tooled up a new facility in Dearborn, Michigan, to roll out 25,000 of the pickups annually. It now hopes to bring capacity up to about 150,000 by the end of 2023.
These moves reflect the growing demand for all-electric vehicles. EVs accounted for less than 1% of the U.S. market in 2019, a figure that grew to 5% for all of 2022, with the share reaching as high as 7% in recent months. That could jump to 20% by 2025, according to John Murphy, lead auto analyst for Bank of America Research – though Murphy said the actual number will likely depend upon keeping EVs affordable.
Taking On Tesla
In the case of Tesla, the automaker raised prices repeatedly over the last two years. And it wasn’t alone. Ford upped the MSRP on both Mach-E and Lightning last year, reflecting its struggle to turn a profit in a segment where most manufacturers have traditionally built EVs at a loss.
But with raw material prices stabilizing and increased sales helping to achieve great economies of scale, Ford appears determined to stay competitive.
“We are not going to cede ground to anyone,” said Marin Gjaja, Chief Customer Officer, Ford Model e, the side of the company focused on battery-electric vehicles. “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.”
Is a Price War Coming?
Revised Federal Incentive Program
