Ford Cuts Electric Vehicle Prices by Up to 10 Million Won... "Price Competition Ignites"

Starting Price of Mustang Mach-E Lower Than Model Y
"Reflecting Inventory Issues in the EV Industry"
Xiaopeng CEO "It Will Be a Bloodbath"

American automaker Ford has significantly lowered the price of its flagship electric vehicle model, the Mustang Mach-E.

According to a Bloomberg report on the 20th (local time), Ford reduced the price of the 2023 model year Mustang Mach-E electric crossover SUV by $3,100 to $8,100 (approximately 4.1 million to 10.8 million KRW) depending on the trim. As a result, the starting price of the model dropped from the previous $42,995 to $39,895 (about 53 million KRW).

[Photo by Bloomberg]

The report interpreted that the overall slowdown in demand in the electric vehicle market and changes in regulatory environments triggered this price cut. Last month, Ford's electric vehicle sales volume fell 11% year-over-year, and the Mustang Mach-E's performance plummeted by 51%. Additionally, due to the tightening of detailed requirements under the U.S. Inflation Reduction Act (IRA) last month, Ford lost eligibility for a tax credit benefit worth $3,750 (about 5 million KRW).

There is analysis that Ford's price reduction move has reignited the price competition in the electric vehicle industry that began last year. This is because the starting price of the Ford Mustang Mach-E has become lower than that of its competitor, the Tesla Model Y ($42,990). Furthermore, Ford's decision to reduce prices only for the 2023 model year, excluding the 2024 model, is seen as an attempt to clear unsold inventory from last year, indicating that inventory issues have become serious across the electric vehicle industry.

CNBC obtained and reported on a New Year's letter sent by He Xiaopeng, CEO of Chinese electric vehicle startup Xiaopeng (Xpeng), to employees. In the letter, CEO He emphasized that "this year will see fierce competition among electric vehicle companies that could end in a 'bloodbath'." He added, "Xiaopeng has accumulated considerable experience, and I firmly believe that our courage, fighting spirit, and perseverance will lead us to victory."

In China, a fierce competition is underway among startups such as Xiaopeng, Weilai (NIO), and Lixiang (Li Auto), alongside Tesla, which has an electric vehicle factory in Shanghai, and BYD, which has become the world's largest electric vehicle manufacturer.