Ford vs Tesla : EV makers slash prices to become top pick among customers
Ford Motor Company has formally entered the price war in the electric vehicle (EV) market by slashing prices of its models and engaging with the market leader, Tesla, which also announced price cuts earlier this month, Business Insider reported.
Elon Musk's Tesla is the undisputed leader in the EV segment, having sold its cars in Europe, China, and the U.S. In 2022, the carmaker delivered 1.3 million vehicles globally, even after registering 40 percent growth, and has been struggling at the Wall Street.
The reason for the poor performance has been the competition that is heating up in the EV space, with brands like Ford and General Motors making a splash with electric models of their legacy cars. Recognizing the threat, Tesla slashed car prices by up to 20 percent across its popular cars, Model 3 and Model Y, earlier this month, starting a price war and now Ford has responded.
What will Ford Mach-E cost now?
As per Business Insider's report, the price reductions announced by Ford vary by trim level and performance packages. A standard Mach-E starts at $45,995 and receives a $900 discount, while the highest discount of $5,900 is offered on the Mach-E GT with an extended range.
The price cuts aren't just for new owners but will also benefit owners who are currently on the waitlist for delivery of their Mach-E, for whom Ford will adjust the price upon delivery. Customers who have already received deliveries of their Mach-E's can also expect an offer that will refund the difference they have paid for their cars, Marin Gjaja, chief customer officer at Ford Electric division, told reporters.
How will Ford manage price cuts?
Tesla's announcement of a price cut is expected to dip its revenues by $7 billion next year. However, the move is expected to help the carmaker protect its customer base in the face of rising competition and perhaps even increase its market share.
On the other hand, Ford does not enjoy the same liberties as Tesla and is reportedly working on thin margins. In such a scenario, engaging in a price war could see its profits being wiped off completely.
CEO Jim Farley provided the answer to that question in a tweet, where he said,
At @Ford, we want to make EVs more accessible, so we’re increasing #MustangMachE production & reducing prices across the Mach-E lineup. Scaling will shorten customer wait times. And with higher production, we’re reducing costs, which allows us share these savings with customers.— Jim Farley (@jimfarley98) January 30, 2023
Farley is firm in his belief that Ford can push Tesla off the top spot in the EV market and the price war could be the beginning of things between these two companies.
In addition to taking Tesla head-on with its price cut strategy, Ford's announcement has one more benefit. The reduced prices also allowed Ford's cars to become eligible for tax credits of up to $7,500, which under new regulations, had price caps.
It remains to be seen if Tesla's customers remain loyal to the brand or had just picked Tesla since it was the only EV provider in the market then. The test for Elon Musk's Tesla has now really begun.
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