Earlier this week Ford Motor Company announced that it was lowering costs for its Mustang Mach-E as well as boosting the sport utility vehicle’s production. This came weeks after Tesla lowered prices for its cars by a whopping 20% in reaction to declining demand globally.
Ford further indicated that orders that had already been placed by the customers and were awaiting delivery would be subjected to the revised costs. Ford’s financing department will offer low interest charges of as little as 5.34% on Mach E orders made on Jan. 30, 2023, through April 3, 2023.
The price reductions for the two lower-end Mach-E models equate to below $1,000 each. Other models with relatively long battery ranges and high-end extras saw their price tags slashed by $3,680 and $5,900, which represents a 6% to 9% reduction.
Ford CEO Jim Farley said in a tweet that the move is intended to increase the supply of electric vehicles. Therefore, the company is expanding production and decreasing prices throughout the Mach-E range. He added that with increased output, the company is cutting on expenses, allowing it to pass along savings to its clients.
Mustang Mach-E rear-wheel-drive models with normal batteries are currently available for $45,995, saving buyers $900, while the Mach-E GT high-performance with a longer battery capacity is currently available for $63,995, saving buyers $5,900.
Tesla’s most affordable vehicle is the Model 3, which is a bit small compared to Ford’s Mustang Mach-E, whose starting price is $43,990. The Tesla all-wheel-drive Model Y, an immediate rival to the electric Mustang, has a starting price of $53,490, while Ford’s Mustang Mach-E all-wheel-drive with identical battery capacity is currently listed for $53,995.
According to the IRA, electric vehicles costing less than $55,000 may be eligible for the federal tax subsidy of not more than $7,500, which became available on Jan. 1, 2023. Due to the pricing changes by Ford, many Mach E cars will consequently be eligible for the subsidy.
Ford’s Mach-E sales were less than 40,000 in 2022, accounting for a 45% increase from 2021, making the Mach-E one of the top three best-selling electric vehicles behind the Model Y and Model 3 from Tesla.
Because of the huge demand for BEVs over the past couple of years, Tesla and Ford, as well as other car manufacturers, have had to increase the costs of electric cars for most of that time. However, as a result of the central banks’ raising interest rates, the demand for vehicles and other expensive commodities has decreased, hence the price reduction.
As the price war deepens, startups such as Cenntro Electric Group Ltd. (NASDAQ: CENN) will have to find ways to compete in an industry that has the major players trying to out do each other in terms of delivering affordable vehicles.
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