Ford CEO calls electric vehicle market price cuts ‘a worrying trend’

WASHINGTON – Ford chief executive Jim Farley said on Wednesday that price cuts in the electric vehicle (EV) market were “a worrying trend” after the American automaker

dropped prices for its Mustang Mach-E

in response to a series of reductions by rival Tesla.

Ford on Tuesday announced a price cut of up to 8 per cent of its Mustang Mach-E EV, the second cut the automaker announced this year. Ford’s Mustang Mach-E now starts from around US$43,000 (S$57,000) after a series of price tweaks this week.

Tesla resumed taking orders for its Model 3 Long Range edition with a starting price of US$47,240, according to its website on Wednesday.

The latest price appears to be about 19 per cent lower than when it was last available for sale. Production of the popular model was halted last year due to a backlog of orders stretching into 2023.

Tesla continues to adjust the pricing of its cars on an almost weekly basis as battery raw material prices fluctuate and competition in key markets including the United States and China heats up.

Mr Farley compared the price war in the EV market to Henry Ford’s series of price cuts for the Model T starting in 1913.

But the Ford chief said the company founder’s strategy ultimately put Ford at risk.

“You do not want to commoditise the product,” Mr Farley said at a Wall Street Journal forum.

“The resale value for people who bought at higher prices is awful. They never forget,” Mr Farley said.

Ford will follow Tesla price cuts for models, such as the Mustang Mach-E, that compete head-on with Tesla’s Model Y, he said.

“There is a limit to how far we will go,” he added.

Tesla CEO Elon Musk praised Ford’s EV strategy.

“Always tough with margins for new vehicle lines, especially when there are major technology shifts,” Mr Musk wrote on Twitter.

“I think Ford’s overall strategy with EVs is smart. The electric F-150 (Lightning) has high demand.” REUTERS, BLOOMBERG