[Asia Economy Reporter Yujin Cho] Following Tesla, the number one electric vehicle (EV) company in the U.S. market, Ford, the second-largest company, has joined the wave of EV price cuts. The Tesla-led EV price reduction war is spreading across the entire traditional automobile industry.
On the 30th (local time), according to major foreign media including The Wall Street Journal (WSJ), Ford announced that just weeks after Tesla, the largest EV company in the U.S., implemented a price cut policy, it would reduce the price of its electric vehicle model Mustang Mach-E by 1.2% to 8.8%. As a result, the price of the Mustang Mach-E model has dropped by up to $5,900.
Ford stated that the price reduction was possible due to cost savings in EV production through supply chain optimization and that it would help maintain competitiveness amid rapid market changes.
Major foreign media evaluated Ford's recent price cut as evidence that Tesla's price reductions are increasing downward price pressure on competing companies.
Wedbush analyst Dan Ives commented, "Tesla's price cuts have triggered a full-scale price war in the U.S. electric vehicle market."
Last year, Ford held a 7.6% market share in the U.S. EV market, ranking second after Tesla's 65%. Ford sold 39,458 units of the Mach-E in the U.S. last year, making it the second-best-selling EV after Tesla's 522,000 units.
The Mustang Mach-E, a sports utility vehicle (SUV), is classified as a competitor to Tesla's Model Y.
Garnett Nelson, an analyst at CFRA Research, pointed out, "Tesla's decision to cut prices dealt a direct blow to the pricing strategies of competing models," and predicted that other automakers would also face pressure to reduce prices.
Earlier, Tesla discounted the prices of its sedan models Model 3 and Model S, as well as its SUV models Model Y and Model X, by up to 20%. Consequently, the price of the Model Y was reduced from $66,000 to $53,000.
This price is lower than the highest-end Mustang Mach-E GT ($69,000) as well as the mid-range Premium model ($57,000).
However, due to Ford's price cuts, the price of the Mustang Mach-E Premium model has been adjusted to around $53,000, similar to Tesla's Model Y.
Unlike Tesla, which has some leeway to absorb the impact of price cuts due to high profit margins, latecomers like Ford are expected to see negative effects on profits from the price reductions.
On the day the price cut policy was announced, Ford's stock, listed on the New York Stock Exchange (NYSE), fell by more than 1.5% at one point.
Previously, Bank of America (BoA) analyst John Murphy noted, "Competitors often make very little profit or even incur losses when selling electric vehicles," adding, "Tesla's price cuts will be a burden for competing companies."
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