Ford reduces costs for electric Mustang due to decreased demand for high-end EVs

Ford is reducing the cost of the 2023 all-electric Mustang Mach-E by up to $8,100 in an effort to clear inventory and rival Tesla’s more affordable electric vehicles.

The total market share of new electric vehicle (EV) sales has increased, reaching around 8% in the United States in 2023. As market share has grown, the customer demographic has transitioned from early adopters to the early majority, who are not ready to pay more for electric vehicles, according to Ford CFO John Lawler in a recent interview

The price reductions were implemented after the Mach-E’s disqualification for a $3,750 tax credit and a 51% decline in sales of the all-electric SUV in January compared to the same month in 2023. EV sales decreased by 11% compared to January of the previous year.

The Detroit Free Press previously published the updated pricing, which was sent to the automaker’s network of dealers.

Ford verified to that pricing reductions for model year 2023 Mustang Mach-E cars vary from $3,100 to $8,100. Ford Credit is providing two offers: 0% financing for 72 months for eligible purchasers and a $7,500 cash bonus for lessees. An additional incentive is provided on top of the tax benefit currently passed on to customers via the Ford benefit.

Ford spokeswoman Marty Günsberg said in an email that the Mustang Mach-E will be the second-best-selling electric SUV in America in 2023, and Ford will be the second-leading electric vehicle brand in the country. “We are changing the prices for MY23 models to better align with market conditions and enhance the balance between sales growth and customer value.”

Ford and other car manufacturers are striving to keep up with Tesla as demand for high-priced electric vehicles decreases.

Lawler said that Tesla simultaneously increased production of the Model 3 and Model Y, leading to a misleading perception of demand. Two new automobiles have entered a category that was cheap for early adopters, but with extremely limited availability. Consequently, there was significant expansion, although their output was restricted. It seemed that there was a high demand, although it was mostly from early adopters.

Lawler said that when Tesla began reducing costs, it was believed that the business was attempting to disrupt the market and prevent competitors from entering. He proposed that Tesla was really reacting to the same evolving market circumstances.

Tesla adjusted the prices of its four models, the Model S, Model X, Model 3, and Model Y, from the second half of 2022 through all of 2023. The firm, which operates without a dealership model and sells directly to customers, reduced prices every quarter last year. This strategy boosted sales but decreased earnings.

Tesla achieved a record amount of electric car shipments in the fourth quarter, contributing to a total of 1.81 million deliveries in 2023. Operating income decreased because of rising research and development expenses, the production rise of the Cybertruck, and ongoing reductions in prices for its top-selling cars, the Model 3 and Model Y.