Ford CEO: Electric Car Price War Worries, No Indefinite Follow in 2023
Price War
The price war in the electric vehicle market is intensifying, and Ford CEO Jim Farley says it’s a worrying trend and he’s not willing to cut the price of electric vehicles indefinitely to compete with the Tesla competes.
Earlier this week, Ford Motor Co announced it was cutting the U.S. price of its electric crossover Mustang Mach-E by as much as $4,000, or an 8 percent price cut.
This is the second price cut this year by the company, in response to a series of price cuts by Tesla that began in January. The Mach-E is Ford Motor Company’s first all-electric vehicle model, competing directly with Tesla’s Model Y.
Farley last week likened Tesla’s price war in the electric car market to a series of price cuts on the Model T that Ford Motor Co. founder Henry Ford began in 1913.
He reiterated his view at a recent Wall Street Journal forum that Henry Ford’s tactics ultimately brought the Ford Motor Company into crisis.
“You don’t want to cheapen the product, and the people who bought at a higher price have a terrible used car value and they never forget,” Farley said. He noted that Ford Motor Co. would follow Tesla in lowering prices on models like the Mach-E, but said, “We have a bottom line.”
He didn’t elaborate on what that bottom line would be, but given that Ford Motor Co.’s EV business lost $722 million in the first quarter of 2023 and is expected to lose $3 billion this year, the automaker is clearly reluctant to lower its margins further. price.
If Tesla continues to cut prices, Ford Motor Co. may not be able to keep up unless they are willing to use profits from their traditional internal combustion engine division and commercial vehicle division to support the electric vehicle price war.
Farley also brought up an interesting point in the interview that Ford Motor Company has no plans to ditch Apple CarPlay, the exact opposite of GM, which recently said it would phase out CarPlay and Android Auto in future models.
Ford Motor Company “lost that war a decade ago,” Farley explained, referring to streaming into cars, adding that “70 percent of Ford customers in the U.S. are Apple users.”
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