It is very unusual for an automaker to significantly reduce the suggested retail price of a vehicle after its launch. But now that Ford has joined Tesla by announcing significant price cuts, that’s exactly what happened to his four best-selling electric cars in the United States.
Could this be the start of a full-blown electric-vehicle price war? It certainly puts pressure on players to make cars more affordable.
“Tesla hasn’t done a lot of things in the way it’s traditionally marketed its cars, but the idea of a manufacturer’s suggested retail price changing significantly in the middle of a model year is highly unusual. In our industry, especially at these levels, it’s thousands of dollars,” he says.
Whether Ford and Tesla’s competitors will announce their own price cuts remains to be seen. The overall trend in the market is actually the opposite. Prices have climbed steadily, with the average new car now selling for nearly his all-time high of $50,000.
Price cuts aren’t the only way to make a car more affordable. The traditional way to achieve that and attract buyers is through the use of incentives, which can take the form of financing deals or cash rebates. But vehicles over a certain amount (depending on vehicle type) are not eligible for the new EV tax credit of up to $7,500, so the option to lower sticker prices is particularly attractive in the EV market right now.
On Monday, Ford announced a price cut for the Mustang Mach E SUV from $600 to $5,900. The move comes just weeks after Tesla slashed some of the prices, including dropping the base price of the Model Y SUV by his $13,000. (Note: Tesla increased its base price by $500 last week.)
Following all the price cuts, the Mach-E starts at $45,995 and the Model Y at $53,490. This reduction means that more manufacturers’ electric vehicles will qualify for the tax credit.
- Moody’s analyst Rene Lipsch said Ford’s price cut highlights the challenges facing automakers in balancing the goals of gaining market share and making a profit. “Increasing price competition for electric vehicles may lengthen the timeframe between Ford offering electric vehicles and making a significant contribution to profitability,” he adds.
- According to Nana-Sinkam, Ford has not announced a price cut for its highly regarded F-150 Lightning electric truck.
The big question now is whether other EV makers will cut sticker prices. Several companies have already said they have no plans to do so, but the situation is still evolving.
- General Motors CEO Mary Barra said on Tuesday’s earnings call: “
- Volkswagen Group CEO Oliver Blume made a similar comment to the German newspaper, explaining that the company believes in current EV pricing and is focused on reliability.
- Brian Moody, executive editor of car valuation firm Kelly Blue Book, noted that interest in Tesla vehicles surged on the company’s website in January, prompting some brands to immediately cut prices. “Given Tesla’s big price cuts, it’s likely that other automakers will follow suit, although they may not say Tesla is the reason for the cuts.” , it certainly adds pressure,” he says.
what it means to you
Given the price cuts and new tax credits, “Perhaps there has never been a better time to buy an electric vehicle,” says Pat Ryan, CEO of car shopping app CoPilot.
- With Tesla’s price cuts, competitors, including Ford, are likely to take losses on at least some electric vehicles to gain market share, which is good news for buyers, he said.
- But waiting shoppers will have more vehicles to choose from, especially when GM and BMW have ambitious plans to launch dozens of electric vehicles by 2025. says Ryan.
- If you’re looking at a used EV, prices for these are also significantly lower. “For the first time since November 2021, the average pre-owned EV on the market has him below $50,000. Around $48,700, so prices are really down,” he says Ryan. Falling gas prices and Tesla’s cutback in new car sales have contributed to the softening.
Tesla’s price cut shocked the EV industry, and Ford’s move could be the first major sign that EV prices overall could become more affordable this year.
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