Ford Cuts Prices of EV Mustang Mach-E

“We are not going to cede ground to anyone,” said Marin Gjaja, chief customer officer of Ford’s electric-vehicle business. He added that the company is keeping its pricing competitive and reducing customer wait times. 

Ford’s Mach-E price cuts range from 1.2% to 8.8%, depending on the configuration. In dollar terms, that is about $600 to $5,900 less than the previous sticker price on the sporty SUV, a model that hit the market in late 2020 and is a direct competitor to Tesla’s Model Y. 

The price walk back is the latest sign of intensifying competition in the electric-vehicle market, which has grown rapidly in recent years, fueled by both Wall Street money and government subsidies.

Separately, on Monday, rival

General Motors Co.

said it had hired Tesla’s former head of business development, Zach Kirkman, to lead mergers and acquisitions for the Detroit auto maker. He joins as GM deepens its investments on its battery supply chain and looks to shore up other building blocks for EVs by making deals with other companies.

Shares of Ford were down about 2% to $12.98 in midmorning trading. Tesla shares fell about 4%.

Ford’s move comes after Tesla recently cut prices for some of its vehicles sold in the U.S. by nearly 20%, aiming to lure new buyers. Chief Executive

Elon Musk

said last week that the price cuts have fueled a surge in orders. The Wall Street Journal reported that the price cuts have angered some customers who missed out by ordering too early. 

“Price really matters,” Mr. Musk said during an earnings call last week. “There’s just a vast number of people that wanted to buy a Tesla car but can’t afford it.”

Analysts had been anticipating a response from legacy auto makers, some of which had recently raised prices on their EVs to offset rising materials costs.

Ford said current Mach-E customers who are awaiting delivery will automatically receive the reduced price.

“We want our customers to know they made the right decision by choosing a Mustang Mach-E,” Mr. Gjaja said. 

Tesla’s price cuts sent waves through the market for electric vehicles, prompting customers to rethink purchasing decisions and putting pressure on competitors such as Ford. On Wall Street, some analysts suggested the price cuts were made in response to softening demand for Tesla’s EVs. Others viewed the move as Tesla squeezing competitors by sacrificing some of its strong operating-profit margins—which are larger than most car companies—while also lowering prices enough to qualify many models for a $7,500 federal tax credit.

John Murphy, an auto analyst for Bank of America Merrill Lynch, said Tesla’s markdowns create the risk of triggering a broader EV price war in the auto industry. Mr. Murphy, in a research note earlier this month, said many car companies are losing money on EVs and will have to seek ways to build these models even more efficiently.

“These price cuts are likely to make business even more difficult, just as they are attempting to ramp production of EV offerings,” he added.

Ford became the No. 2 EV seller in the U.S. last year, although it still trails Tesla by a wide margin. Tesla accounted for about 65% of all electric vehicles sold in the country last year, according to market research firm Motor Intelligence. Ford’s EV market share in the U.S. was about 7.6% last year.

Write to Will Feuer at [email protected]