DETROIT — Ford Motor is increasing production and cutting prices of its electric Mustang Mach-E crossover, weeks after industry leader Tesla announced similar plans for its EVs.
The Detroit automaker said Monday it will lower the pricing of the Mach-E, which is comparable to Tesla’s Model Y, by an average of about $4,500, depending on the model. The reductions range from $600 to $5,900, compared with Tesla’s price cuts of up to $13,000 on its Model Y earlier in January.
Wall Street analysts and investors largely applauded Tesla’s price reductions as a way to drum up demand and increase sales, despite concerns the move would erode some profits. Analysts expected Tesla’s cuts to put pressure on other automakers to cut their own prices.
In Ford’s case, the price cuts will mean not all Mach-E models, based on the trim, will be profitable on a per-unit basis, according to Marin Gjaja, chief customer officer of Ford’s electric vehicle business. He said Mach-E production is expected to increase from 78,000 vehicles to 130,000 units annually.
“We are responding to changes in the marketplace,” Gjaja said during a media briefing, referencing new federal EV incentives and Tesla’s price cuts. “As we look and want to stay competitive in the marketplace, we’re having to respond.”
Ford expects to offset some of the profit shrink with cost improvements thanks to the additional production as well as a reduction in some commodity costs, according to Gjaja. The Mach-E’s starting price will now range from about $46,000 to $64,000. Tesla’s Model Y starts at about $53,500 to $57,000, without any options.
The Mach-E led Ford to become the second-bestselling automaker of EVs last year in the U.S., albeit trailing Tesla by a wide margin. Ford sold more than 65,000 EVs in the U.S. last year. Motor Intelligence estimates Tesla, which does not report sales by region, sold more than 522,000 EVs in the U.S. in 2022.
Ford said existing Mustang Mach-E customers awaiting delivery of their vehicle will automatically receive the adjusted price. For customers who bought one of the vehicles after Jan. 1, and who have already received their Mustang Mach-E, Ford will reach out with a “private offer,” the company said.
In addition to the adjusted pricing, Mustang Mach-E vehicles ordered between Jan. 30 and April 3 will be eligible for special rates with Ford Credit, as low as 5.34%.
Ford declined to comment on which Mach-E trims and models would be profitable after the price cuts. The company is expected to begin separately reporting financial results for its electric vehicle business, known as Model e, later this year.
“We want to make money. Don’t get me wrong, we absolutely want to make money,” Gjaja said. “Believe you me, I know that we need to be trying to get more profitable because we will be publicly accountable for that number.”
To increase Mach-E production, Ford is upgrading the plant in Mexico where the vehicles are made. It is expected to come back online next month, Ford said.