It’s official: deflation in EVs looks to be upon us.
Following in the footsteps of Tesla, which has aggressively slashed prices since the beginning of 2023, Ford is now lowering the starting prices of its Mustang Mach-E by thousands of dollars, according to a new report by CNBC.
Earlier this week the automaker said it would slash prices between $1,000 and $4,000 per vehicle, resulting in the starting price of new Mustang Mach-E’s to fall between $42,995 and $59,995.
Like Tesla, Ford had already announced some modest cuts, bringing down the price of the Mach-E by $600 to $5,900 in January.
We noted days ago that Tesla was starting to steady its pricing with its Model Y and Model X. Bloomberg reported Tuesday morning that Tesla’s main models were marked up $250 each, stating that the model prices are being raised both in the United States and China. The Model 3 is now priced at $40,240 in the US and 231,900 yuan in China, while the Model Y is now priced at $47,240 in the US and 263,900 yuan in China.
The hikes are small compared to the cuts the company has put in place since the beginning of the year. We had just noted days ago that, due to aggressive price cuts, the Model Y was cheaper than the average new vehicle in the U.S. by $759. That’ll likely still be the case, despite the $250 hike.
As we noted last week, Morgan Stanley has also said it sees a ‘great productivity race‘ that will benefit some sectors that have strong political support – like autos.
“Efforts in the US to re-, friend-, and near-shore critical industries have strong political support. But these initiatives narrow the geographical options for US multinationals, making cheap labor – particularly for skilled manufacturing – harder to find and exacerbating an underlying US economic challenge,” the bank wrote.
“Similar historical conditions have pressed companies to focus on improving productivity through the development, diffusion, and integration of new technologies. We expect US companies to invest in infrastructure and new technologies, AI in particular, to boost productivity. Companies that rely on labor and lack substantial financial resources will likely be challenged by this dynamic.”
Morgan Stanley analyst Adam Jonas concluded last week: “Like other [automakers], Ford must decide what kind of EV strategy to pursue: Grow fast and burn cash or a more focused approach that prioritizes capital discipline.”
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