Ford Motor Company CEO Jim Farley described price cutting in the electric vehicle market as “a worrying trend” after the company dropped US prices for the Mustang Mach-E earlier this week by up to $4,000.
On May 2, Ford announced a price cut of up to 8 percent of its electric crossover, the second cut the automaker announced this year for its EV that competes directly with the Tesla Model Y. The price cuts were in response to a series of reductions by Tesla that started in January.
Last week, Farley compared the price war started by Tesla in the EV market to Henry Ford’s series of price cuts for the Model T starting in 1913. Speaking at a Wall Street Journal forum recently, he reiterated his opinion that the company founder’s strategy ultimately put Ford at risk.
“You do not want to commoditize the product. The resale value for people who bought at higher prices is awful. They never forget,” Farley said. He noted that Ford will follow Tesla price cuts for models such as the Mustang Mach-E, but said, “There’s a limit to how far we’ll go.”
He didn’t elaborate on that, but considering that Ford’s Model e EV business unit posted a $722 million loss in Q1 2023 and is expected to lose $3 billion this year, the automaker is understandably nervous about cutting prices further.
It will likely not be able to keep up with Tesla if the EV maker continues to drop prices – unless Ford is willing to fund the EV price war with profits from its Ford Blue ICE division and Ford Pro commercial vehicle unit.
Another interesting point raised by Jim Farley during the discussion is that Ford does not plan to drop Apple CarPlay software that allows customers to mirror their smartphone screens in a vehicle’s dashboard.
This is a completely opposite position to General Motors, which recently said it will phase out CarPlay and Android Auto in future models. Farley explained that Ford “kind of lost that battle 10 years ago” – referring to entertainment streamed into a car – adding that “70 percent of Ford customers in the US are Apple customers.”