Ford (F – (Free Report) has announced a significant price cut for its 2023 Mustang Mach-E to boost sales as demand for electric vehicles (EVs) has not picked up as expected. The price cut is expected to make the model more accessible, helping Ford strengthen its position in the highly competitive EV market.
The Mustang Mach-E has quickly risen in popularity, becoming the second best-selling electric SUV in the US in 2023. However, achieving this status required Ford to engage in a fierce price war with the EV behemoth. Tesla (TSLA – Free Report), which is now entering its second year. Despite Tesla’s declining market share in the country, the company still commands more than 50% of the EV market.
Although the Mustang Mach E saw its best sales in the October-December 2023 period, sales volume fell 50.7% year-on-year in January 2024 amid the suspension of tax incentives. As part of its efforts to protect national interests and strengthen domestic supply chains, the Biden administration has tightened rules on stimulus measures since the beginning of the year, making Mach-E ineligible for a $3,750 US tax credit.
Amid the drop in demand, Ford has lowered prices for the Mustang Mach-E for the 2023 model year in the $3,100-$8,100 range across the range, with the revisions taking effect immediately. The cuts are expected to improve the Mach-E’s appeal against rivals, notably Tesla, which has also been adjusting prices to attract more customers.
The price cut puts the Select RWD version of the Mach-E below the $40,000 mark for the first time. This move is not just about price competition. It is a reflection of the changing landscape of EV sales, which is not contributing to the pace seen in previous years. The slowdown shows that consumers are price conscious and still concerned about the reliability of the payment infrastructure.
A Ford spokesperson highlighted that the new pricing strategy aims to balance sales growth and customer value, adapting to market conditions to maintain a competitive edge. Pay-as-you-go devices with long-range batteries received the biggest discounts, signaling Ford’s desire to attract customers looking for high-quality features without a hefty price tag. The Premium AWD trim (Extended Series) now retails for $48,895, an $8,100 discount from its original sticker price.
Ford Credit also offers attractive incentives, including a $7,500 “Red Carpet Lease Incentive” and 0% financing for 72 months for qualified buyers. These incentives, along with the federal EV tax credit available for leased vehicles, significantly lower the barrier to entry for potential EV owners, making the Mach-E an even more attractive option.
As Ford CEO Jim Farley points out, consumer expectations are pushing automakers to rethink their pricing strategies in response to competition and market changes.
Zacks Rank & Key Options
Ford currently has a Zacks Rank #3 (Hold).
Some of the best ranked players in the auto role are General Motors (GM – Free Report) and PACCAR (PCAR – Free Report) , both sport a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 stocks here.
The Zacks Consensus Estimates for GM’s 2024 sales and earnings suggest year-over-year growth of 1.9% and 17.2%, respectively. EPS estimates for 2024 and 2025 have been improved by $1.26 and $1.70, respectively, in the last 30 days.
The Zacks Consensus Estimates for 2024 and 2025 EPS have risen 36 cents and 25 cents, respectively, over the past 30 days. The trucking giant beat earnings estimates in the trailing four quarters, with the average surprise being 17.07%.