Ford (F) Slashes 2023 Mustang Mach-E Prices to Boost Sales
Ford F has announced significant price reductions for its 2023 Mustang Mach-E to boost sales as the demand for electric vehicles (EVs) has not risen as expected. The price cut is expected to make the model more accessible, thereby helping Ford to solidify its standing in the highly competitive EV market.
The Mustang Mach-E has quickly risen in popularity, becoming the second bestselling electric SUV in the United States in 2023. However, achieving this status required Ford to engage in a fierce price war with the EV behemoth Tesla TSLA, which is now entering its second year. Despite Tesla's dwindling market share in the country, the company still commands over 50% of the EV market.
While Mustang Mach E saw its best sales quarter in the October-December 2023 period, volumes tumbled 50.7% year over year in January 2024 amid the discontinuation of tax incentives. As part of its efforts to safeguard national interests and bolster domestic supply chains, the Biden administration has tightened rules on stimulus measures since the beginning of the year, rendering the Mach-E ineligible for a $3,750 US tax credit.
Amid the demand slowdown, Ford has slashed the prices for the 2023 model year Mustang Mach-E in the range of $3,100-$8,100 across various models, with the adjustments taking effect immediately. These cuts are expected to enhance Mach-E's appeal against rivals, particularly Tesla, which has also been adjusting prices to captivate more customers.
The price reduction positions the Select RWD version of the Mach-E below the $40,000 threshold for the first time. This move is not just about price competitiveness. It's a reflection of the shifting landscape of EV sales, which are not accelerating at the pace seen in previous years. The slowdown suggests that consumers have become price-sensitive and are still apprehensive regarding the reliability of the charging infrastructure.
Ford's spokesperson highlighted that the new pricing strategy aims to balance sales growth with customer value, adapting to market conditions to maintain a competitive edge. The premium trims with extended-range batteries received the most substantial discounts, signaling Ford's intent to attract customers seeking high-end features without the premium price tag. The Premium AWD (Extended Range) trim is now priced at $48,895, at a discount of $8,100 from its prior sticker price.
Ford Credit is also introducing enticing incentives, including a $7,500 "Red Carpet Lease cash incentive" and 0% financing for 72 months for qualified buyers. These incentives, coupled with the federal EV tax credit available on 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 driving automakers to reconsider their pricing strategies in the face of a competitive and changing market landscape.
Zacks Rank & Key Picks
Ford currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are General Motors GM and PACCAR PCAR, both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GM’s 2024 sales and earnings suggests year-over-year growth of 1.9% and 17.2%, respectively. The EPS estimates for 2024 and 2025 have improved by $1.26 and $1.70, respectively, in the past 30 days.
The Zacks Consensus Estimate for PCAR’s 2024 and 2025 EPS has moved up 36 cents and 25 cents, respectively, in the past 30 days. The trucking giant surpassed earnings estimates in the trailing four quarters, the average surprise being 17.07%.
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