Ford is making significant moves in the highly competitive battery-electric vehicle (BEV) market by reducing prices and increasing the targeted range for its popular Mustang Mach-E. The standard-range model now boasts an estimated range of 250 miles (rear-wheel drive) and 226 miles (all-wheel drive), as per the Environmental Protection Agency (EPA) estimates.
Amidst a price war among automakers in the BEV segment, Ford has managed to lower production costs for the Mustang Mach-E by up to $5,000. This intensifies the competition in the compact crossover utility vehicle (CUV) market, where the Tesla Model 3 faces strong pressure from the Mach-E, as well as new contenders like the Volkswagen ID.4 and the soon-to-be-launched Chevrolet Blazer EV. These models come with prices below $40,000 when federal tax credits are factored in, which is significantly lower than the average cost of a new car at nearly $50,000.
Ford’s decision to reduce the price of the Mach-E followed a visit by top executives, including CEO Jim Farley and CFO John Lawler, to China. They observed the increasing availability of affordable electric vehicles from companies like BYD in the Chinese market. Lawler explained during a conference call with analysts after the release of Ford’s first-quarter earnings that the company utilized the vehicle’s digital connectivity to understand customer preferences and eliminate unnecessary features, contributing to the cost reduction.
Ford’s recent reorganization efforts, including the creation of a dedicated electric vehicle (EV)-only unit called Model e, have also helped identify potential cost savings throughout the Mach-E program. By exploring the use of more cost-effective batteries, Ford aims to achieve a $5,000 reduction in price. Lawler stated, “We didn’t wait on Mach-E. So, we started to put together what we thought of as bundled actions into minor programs as we work through Model e, and we’re launching those as we go through the year this year and into next year to get us to that $5,000 reduction.” This pursuit of cost savings is driven by the current “negative margins” associated with BEVs, with Ford reporting a $700 million loss in the first quarter.
Lawler further added that Ford expects the contribution margin for Model e to approach break-even in the current year, with a target of achieving positive earnings before interest and taxes (EBIT) margins for their first-generation electric vehicles by the end of 2024.
In addition to price reductions, Ford has also improved the targeted range for the standard-range Mach-E models, thanks to the adoption of lithium-iron-phosphate batteries. This change has enabled the eAWD configuration to gain an extra 45 horsepower, resulting in enhanced EPA range estimates for both rear-wheel drive and all-wheel drive setups.
Moreover, the standard-range models now offer increased charging capabilities. They can be charged to 100% more frequently through AC home charging, and when using DC fast charging on the road, the time required to reach 80% battery capacity from 10% has been reduced to 33 minutes, saving 5 minutes compared to previous standard-range models.
MSRP for the Mustang Mach-E range from $42,995 to $59,995, and customers can benefit from an Inflation Reduction Act tax credit of $3,750 for this crossover utility vehicle. Contact Gary Crossley Ford, for more information on the Ford Mustang Mach-e and experience the Crossley difference.
