Ford Mach-E Sales Fall 45%. The Reasons: High Prices, Incentive Confusion.

F-150 Lightning sales were 2,264 in January, down 4% from December’s 2,359. Mustang Mach-E sales came in at 2,626, off 45% from the 4,775 SUVs in December. Ford also sold 357 E-transit vans.

The Mach-E drop demonstrates how government incentives can influence buyer behavior.

The Inflation Reduction Act, enacted last summer, gives a $7,500 purchase tax credit to buyers of qualifying EVs. The IRS, the Treasury Department subsidiary that implements the law, considers the Mach-E to be a sedan—not an SUV, putting the maximum qualifying price for a Mach-E at $55,000.

Coming into this year, Ford had several Mach-E trims that were more expensive than $55,000. The company cut prices for the electric Mustang on Monday, hoping to boost demand and have more trim levels qualify for the tax credit. Now, the vehicle starts at just shy of $46,000.

The incentive price cap for trucks is $88,000; the Lightning starts at about $55,000.

The
Tesla
(TSLA) Model Y was in the same boat as the Mach-E, which led CEO Elon Musk to cut U.S. prices for the Y on Jan. 12.
Tesla
‘s cut might have been a factor in Ford’s decision to lower prices as well.

Investors didn’t react to the January EV sales dip. In midday trading, Ford stock was up 5.2%, to $14.50. The
S&P 500
was up 1.5% and the
Dow Jones Industrial Average
was down 0.2%.

Ford’s overall sales are helping. Ford sold 146,356 in the U.S. including 55,001 F-Series trucks. Those figures are up about 2% and 9% from last year.

Ford reports fourth quarter earnings Thursday evening. Wall Street is looking for per-share earnings of 62 cents from sales of $41.4 billion.

Write to Al Root at allen.root@dowjones.com