Ford Responds to Tesla’s Price War – What It Means for the Mustang Mach-E

USA
Ford is responding to Tesla’s price war – what it means for the Mustang Mach-E electric model

The sharp price cuts at Tesla are putting pressure on the competition. Ford is now reacting to the price war in the USA and is making changes to the range of its Mustang Mach-E electric car. According to the company, the aim is to remain competitive.

In early January, Tesla reduced its vehicle prices by thousands of dollars and euros in the US and Europe. Analysts then suspected that there would be new competition, even a price war, in the automotive industry. Around three weeks after the price reductions implemented by the US electric car manufacturer, Ford is also reducing the prices of its Mustang Mach-E model in the USA. The electric SUV, comparable to the Tesla Model Y, will be several thousand dollars cheaper in the USA.

As Ford announced this week, the US automaker wants to reduce the price of the Mustang Mach-E by up to 5900 US dollars and at the same time increase production of the successful model. This is how you want to keep the electric SUV competitive. In addition, the measure should strengthen Ford’s position as the second-largest electric car manufacturer in the United States. The price reductions are between 600 and 5900 US dollars, on average the electric SUV is cheaper by 4500 US dollars. That’s well below price cuts from Tesla, which reduced its US prices by as much as $13,000. The entry-level prices for the Mustang Mach-E are between 46,000 and 64,000 dollars and for the Tesla Model Y around 53,500 to 57,000 dollars.

In return, Ford promises its customers who are still waiting for the Mustang Mach-E they have ordered to be delivered that they will have to pay the reduced price. Those who purchased the SUV after January 1, 2023 would be contacted by their dealer. At Tesla, the sudden price reduction had triggered anger among customers who had already bought their car and paid more for it.

Ford has also announced that it will offer special Ford Credit conditions of up to 5.34 percent if the Mustang Mach-E is ordered through financing between January 30 and April 3, 2023. This allows customers to lock in today’s interest rates, “even if interest rates should increase between order and delivery,” said Craig Carrington, Ford Credit executive vice president for North America.

Ford: Not all Mustang Mach-E models will be profitable

“We will not cede ground to anyone. We are producing more EVs to reduce waiting times for our customers, offer competitive prices and work to create an unparalleled driving experience,” announced Marin Gjaja, chief customer officer at Ford Model e, in a press release from the US automaker. Thanks to the Mustang Mach-E, Ford became the second most popular electric car manufacturer in the USA last year – albeit still well behind top dog Tesla. According to their own statements, two-thirds of Mustang Mach-E buyers would come from competing brands. However, the adjusted offer is associated with new challenges for the US carmaker: due to the price reductions, not all Mustang Mach-E models would be profitable, quoted the US broadcaster “CNBC” Gjaja.

Apparently Ford can’t afford the big price cuts Tesla has made. An analysis by the international news agency Reuters recently came to the conclusion that the company around CEO Elon Musk achieved gross profits of 15,653 US dollars per vehicle in the third quarter of 2022 – five times as much as Ford. However, Gjaja explained in an interview with journalists: “Since we want to remain competitive in the market, we have to react.” The carmaker did not say which versions Ford still expects to make a profit from. However, it is believed that some of the decline in earnings can be offset by an improvement in costs. According to Gjaja, the compensation should be offset by the expansion of production and the savings in raw material costs. Ford is modernizing its plant in Mexico to expand production of the Mustang Mach-E.

Sources: ford, CNBC, Reuters