Ford lowers its prices for the Mustang Mach-E in the U.S. as a reaction to Tesla. The starting price for a Mustang Mach-E is now $ 45 995 ($ 900 lower than before, (-2%), and a GT Extended Range now costs $ 63 995, a whopping $ 5 900 less than before (-8,5%). Tesla decided earlier on to drop its prices up to 20%, first in China, later also in the U.S. and Europe. It’s unclear whether the Mustang Mach-E’s price drop will also occur in Europe.

“Our competitors are adapting their pricing,” says Marin Gjaja, commercial director of EVs at Ford. “If we want to stay competitive, we have to react.” More Mustang Mach-E models are now eligible for the tax cut (- $ 7 500) installed by the government lately, just like different Tesla models (Model 3 and Model Y). In Belgium, the Mustang Mach-E starts at € 61 700, and the Tesla Model 3 and Model Y at € 52 990 and € 49 990, respectively.

Price war will cost money

In the U.S., analysts say that a small price war will start, and other manufacturers will surely have to follow. That’s severely threatening the profit margins that manufacturers have for the moment on their EVs. Since Tesla has been dropping its prices, the demand is higher than the output the company can handle.

But CEO Elon Musk prefers volume above profit at the moment. “A vast number of people that want to buy a Tesla can’t afford it. So these price changes really make a difference for the average customer. Affordability is quintessential if we want to become a mass-producing brand. ” In 2022, Tesla produced 1,36 million cars (+40%), but Muks claims that it is fully equipped to produce 2 million. The target for 2023 is 1,8 million.

At Ford, they are not making money on the Mustang Mach-E yet. In June last year, FCO John Lawler reported that possible profits on the EV “were erased by the steeply increasing prices for raw materials.” Ford is frenetically trying to lower the production costs for Mach-E. To reach this, it also wants to produce higher volumes. In 2023, the output will increase from 78 000 to 130 000 cars.

In reaction, Volkswagen Group CEO Oliver Blume declared that VW would not be persuaded to enter a price battle. “We have a clear pricing strategy, and we are putting great importance on reliability.  Volkswagen has to become a leading producer of electric cars, but this has to be achieved with profitable growth,” he said in an interview with Frankfurter Allgemeine newspaper on Sunday.

Mary Barra, CEO of General Motors, sits on the same line.  Yesterday, she reiterated that the company’s confidence in its current pricing strategy was still valid. Nevertheless, she added that GM would permanently monitor the situation to ensure that her company remains competitive.