DETROIT – Ford Motor Co. announced Monday that it’s dropping the price of some 2023 Mustang Mach-E SUV models by thousands of dollars, just weeks after its primary competitor Tesla also cut the cost of its electric vehicles (EVs).
“We’re not going to cede ground to anyone,” Marin Gjaja, chief customer officer for Ford Model e, told reporters in a conference call. “We’ll continue to push the boundaries to make EVs more accessible for everyone.”
Ford said it has a new electric vehicle supply chain coming online, and the automaker is ramping up production that will allow for faster sales, deliveries and lower prices.
Building more vehicles lowers cost for the company because supplies are purchased in bulk and the average cost per vehicle drops, said Gjaja. Commodity costs are coming down, too, he said.
“I think we are responding to changes in the marketplace,” he said. “We would certainly like for Mach-E to be even more profitable than it is.”
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A key driver to the price cut involved corporate strategy related to passage of the bipartisan Inflation Reduction Act and its incentive program for electric vehicle owners, he said. “We’ve been planning to adjust for that. And obviously our competitors are also adjusting their prices. … We’re having to respond.”
Price cut from $600 to $5,900
Here’s the latest price list for the new Mach-E, not including delivery fees and costs:
- Select RWD (rear-wheel drive) Standard Range, $46,895 to $45,995 ($900 cut)
- Select eAWD (electric all-wheel drive) Standard Range, $49,595 to $48,995 ($600 cut)
- California Route 1 eAWD Extended Range, $63,575 to $57,995 ($5,580 cut)
- Premium RWD Standard Range, $54,975 to $50,995 ($3,980 cut)
- GT Extended Range, $69,895 to $63,995 ($5,900 cut)
- Extended Range Battery, $8,600 to $7,000 ($1,600 cut)
Existing Mach-E customers awaiting delivery of their vehicle will automatically get the lower price and customers with a sale date after Jan. 1, 2023, who have already taken their vehicles home will also qualify for price reduction, Gjaja said.
Stealing Toyota, Honda, Tesla customers
More than two-thirds of Ford’s Mach-E buyers are coming from competitors – primarily Toyota, Honda and Tesla, Gjaja said. “The Mustang Mach-E was the No. 3 EV model in the U.S. in 2022 and updated pricing is part of our plan to keep the SUV competitive.”
Tesla Model Y and Tesla Model 3 took the two top slots in the U.S., Ford noted.
The Mach-E SUV rival is the Tesla Model Y.
Since arriving at dealerships in 2021, Ford has sold 66,601 Mach-E vehicles. (Six vehicles were delivered in late 2020.) The plant in Mexico has been revamped to handle bigger production demand. Production, which has stopped to transition the facility, is expected to restart in first quarter, likely February, Gjaja said.
Ford is planning to go from producing 78,000 Mach-E vehicles a year to 130,000 for North America and Europe, he said. “That’s what that big change is. We think we can stretch that even further over time.”
Target: Tesla Model Y shoppers
Ford has now “secured the batteries and raw materials to scale production of all these models in 2023,” the company said in a news release. Gjaja explained that the company is renegotiating supplier contracts, improving costs on raw materials and constantly improving design elements to cut costs.
“We are reengineering the vehicle on a perpetual basis to try and get costs down,” he said. “It’s a very different way of doing business than we’ve historically done it, where we’ve developed the hardware platform and then largely leave it intact” until the next product cycle.
Tesla started the price war
Tesla slashed prices for certain models by up to 20% earlier this month. The price cuts allowed some of its cars to qualify for a federal electric vehicle tax credit and helped drive demand.
“There’s a vast number of people that want to buy a Tesla car but can’t afford it,” CEO Elon Musk said during a recent earnings call. “So these price changes really make a difference for the average consumer.”
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The starting price for the Model Y Performance fell about 19% to $56,990. The cheapest version available is the Model Y Long Range for $53,490.
“We’ve not lined up with (Tesla) Model Y pricing ever,” Gjaja said. “… I don’t think we’ll line up with Model Y when we’re done with this.”
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Shipping vehicles from the factory to dealerships and customers is more predictable and stable now, Gjaja said. “Our primarily driver will be, can we actually get people their vehicle in, call it 60 days, because we’re making enough of them that we don’t have to have them backlogged for 90, 120, 150 days as has been the case for the last few years.”
“Delivery times are primarily driven by production capacity, so whether it’s us or Tesla, the wait time is basically a function of production,” Gjaja said. “When wait times get exceptionally long, it’s because of production that’s been made worse by the supply chain shortage.”
Speed to market can help improve quality
Expanding capacity by 60% to 70% will bring about speedier delivery. The company has invested more money in plant upgrades during this transition and preparing to add work shifts. Everything is in place and getting ready to go now, Gjaja said.
Ford executives have said in past earnings calls that electric vehicles are not generating a profit yet. Profit or loss on a vehicle depends on which trim level is sold, Gjaja said, declining to provide additional detail.
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‘We want to make money’
These price cuts are viewed as part of the investment, he said, “given we’re investing $50 billion in EVs to compete. You know what? A small investment to get products in the market to build our brands, to build our capability, seems appropriate.”
Still, everyone is mindful of investors and profits. Ford releases earnings this week.
“We want to make money,” Gjaja said. “And we will be doing that. In the next couple of months, we will be reporting out our results as Model e, so it’ll be out there for the world to see it. Believe you me, I know that we need to be trying to get more profitable because we will be publicly accountable for that number.”
Ford Credit will also offer 5.4% rates on Mach-E vehicles ordered between Jan. 30 and April 3, 2023.
Follow reporter Phoebe Wall Howard: on Twitter @phoebesaid.
Story Credit: usatoday.com