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Ford follows Tesla’s example and cuts price on Mustang Mach-E

Yahoo Finance autos reporter Pras Subramanian joins Yahoo Finance Live to talk about the price wars among EV makers.

Video transcript


- Ford following in Tesla's tire tracks, if you will, this week, cutting prices of its electric crossover Mustang Mach-E by as much as $5,900 per vehicle. Senior Autos Reporter Pras Subramanian here with more on the price drop. Pras, it seems like nobody had a choice in the matter after Elon made that move.

PRAS SUBMARANIAN: I mean, this is all in response to Tesla. They dropped the-- they kind of dropped the gauntlet? Dropped the--

- Yes, I think so.

- Some sort of gauntlet was dropped, right? So yeah, I mean, they cut--

- I don't think you drop a gauntlet, actually, but proceed. I think you run the gauntlet.

PRAS SUBMARANIAN: Run the gauntlet? Drop the something.

- You drop a hammer.

PRAS SUBMARANIAN: Drop the hammer, yes, yes, the axe. Cut those prices.

- We are off the tracks. Get back on them.

PRAS SUBMARANIAN: I'll try. So by as little as $600 to, like you said, almost $6,000 across the range of Mustang Mach-Es. They're trying to compete with Tesla. Also one of the most popular models there, the E Performance all wheel drive, I think, of the Mach-E below that $55,000 price cap, very important for those EV tax credits, so big deal for Ford.

Ford said, quote, "We are not going to cede ground to anyone," so some strong words there. That's alluding to Tesla. They also said they're going to increase production. They didn't say by how much they are going to do this year, but they sold around 40,000 Mustang Mach-Es in 2022. So I imagine you'll see a decent lift from that.

- And certainly a number of these automakers feeling the pressure here following these price cuts. Pras, it's interesting when you take a look at Wall Street's reaction because at first there was so much worry about what this was going to do with margins. Now it seems like that sentiment has shifted a little bit. More and more are getting optimistic. There was a new upgrade today on the stock, a little bit more positive outlook here going forward for Tesla.

PRAS SUBMARANIAN: Yeah, Berenberg upgraded Tesla from a hold to buy here, talking about how these concerns over price cuts are misguided. They talk about in the short term, yes, it might affect margins. But in the long term, as factories like Berlin-- sorry, Austin, Berlin and also Shanghai also, they build more. They can build a cheaper level. And that's going to offset some of those price cut concerns, margin concerns. So the analysts there upgraded stock.

They also downgraded GM and also BMW here, talking about weaker demand supply chain and also price mix concerns, although they said that luxury cars can kind of weather a bit more-- charge a bit more for luxury cars and it won't actually affect the sales too much.

- Just a bit curious, so Ford doesn't have the margins that Tesla does. So when they make that $5,900 price cut, that's far more significant for them than it may be Tesla.