The competition in the electric vehicle (EV) market is intensifying as automakers race to offer the most affordable, high-quality EVs to consumers. Ford Motor Company has just made a move to increase its competitiveness by lowering the prices of its flagship EV, the Mustang Mach-E. The decision was made as the automaker is ramping up production of the car, with a target of 130,000 units to be manufactured in 2023, up from 78,000 units in 2022.
Ford CEO Jim Farley made the announcement on Twitter in response to a query, stating that the increased production will shorten customer wait times and reduce costs, which will allow Ford to pass on these savings to its customers. The Mach-E is set to receive a board-wide price cut, with the extended-range GT model receiving an 8.4% discount, or a decrease of $5,900, bringing the price down to $63,995. The price of the extended-range battery is also set to decline by 18.6% to $7,000.
The move by Ford has sparked reactions from industry analysts. Dan Ives, an analyst with Wedbush, believes that the price cut by Ford will encourage other EV manufacturers to also lower their prices, thereby starting a mini-price war in the US EV market. This comes in response to Tesla, the leader in EV sales in the US, which began lowering the prices of its Model 3 and Model Y vehicles in China last October and then in the US shortly after.
Tesla’s CEO, Elon Musk, has credited the recent price cuts as a major reason for a January demand surge, which he stated was the strongest in Tesla’s history. Despite this, Tesla’s shares have declined by as much as 4.35% from their best week since 2013 and are currently trading at $170.17 each.
Morgan Stanley analyst Adam Jonas believes that the value of Tesla’s shares could turn around after declining by 36.94% over the past year. He forecasts that Tesla will sell 7.2 million vehicles by 2030 and grow total revenue at a 24% 8-year compound annual growth rate. However, he also believes that the EV market may be entering a “shake-out” phase, and has reduced exposure across the EV portfolio while making Tesla his Top Pick.
Ford is set to announce its fourth quarter earnings on February 2nd, with analysts expecting an adjusted bottom line of 0.62 per share, a 138% increase from the previous year, on revenues of $40.37 billion. In October, Ford revised its guidance for full-year income to around $11.5 billion, down from a previous estimate of between $11.5 billion and $12.5 billion, but stated that free cash flow is likely to rise to between $9.5 billion and $10 billion.
In conclusion, the competition in the EV market is only getting more intense, with automakers vying for a larger share of the market by offering increasingly affordable and high-quality EVs to consumers. Ford’s recent move to lower the prices of its Mach-E is a clear indication of this trend, and it remains to be seen how other automakers will respond. Regardless, it is an exciting time for consumers as they benefit from the increased competition, which is driving innovation and pushing the boundaries of what is possible in the world of EVs.
