Why Ford’s CEO Doesn’t Want to Continue the Price War With Tesla
If you recently purchased a vehicle with a hefty markup during the recent COVID-related supply chain issues, you probably feel some buyer’s remorse. Many Americans, myself included, unfortunately, found themselves needing a new car during the pandemic, and with a lack of supply on dealer lots, many buyers paid a significant markup to get behind the wheel.
Thankfully much of the pandemic-related inflated vehicle prices have passed. However, a new trend in the automotive marketplace is leading some consumers to regret their purchases; massive price cuts on EVs. Here is everything you need to know about Tesla’s current price cuts and why Ford’s CEO is worried about the future of the EV marketplace.
Tesla continues to cut prices
As Americans throughout the country submitted their taxes on Tax Day this year, would-be EV buyers lost a huge government incentive that was handed out to EV buyers. KBB reported that on April 18th, 2023, the previous $7,500 government tax credit incentive handed out to many EV buyers was halved for a majority of the EVs on the dealer lots today. Tesla was quick to respond, cutting their vehicle prices for the sixth time this year.
To have their sixth price cut this year, Tesla is truly pulling out all the stops to get as many drivers behind the wheel as possible. The most recent Tesla cuts involve their more affordable offerings; the Model 3 and the Model Y.
The Model 3 is now $2,000 cheaper and the Model Y is now $3,000 cheaper. This puts the base Model 3 MSRP right around $39,990 and the cheapest Model Y is now $46,990.
Ford’s CEO is not happy with these Tesla price cuts
According to Ford Authority, Ford is answering Tesla’s price cuts with price cuts of their own. The Ford Mustang Mach-E has had its price cut on nearly every model available with the biggest price cuts found on the Premium rear-wheel drive and all-wheel drive standard range models, which are now $4,000 cheaper than last year’s model.
Ford’s CEO Jim Farley commented on Tesla’s current rapid price cut strategy, noting that “The resale value for people who bought at higher prices is awful. They will never forget.”
Farley’s comments do ring true for many vehicle owners, including those Tesla Model Y owners who purchased their vehicle weeks or even days before the $3,000 price cut was announced. Those consumers essentially lost a considerable amount of value in their vehicles overnight due to bad timing.
Owners may be disappointed, but sales will continue to rise
Jim Farley’s criticism of Tesla’s rapid price-cutting strategy is valid and he is echoing some concerns held by some current owners who feel swindled by these price cuts, but many of these comments will fall on deaf ears.
New Tesla buyers will continue to buy vehicles at an even faster rate with the cuts, and as long as Tesla’s popularity as a brand continues to rise through vehicles being made more and more affordable, the resale value will not be a concern for many people.
Resale value may drop as Tesla cuts the prices of their models, but with Tesla dominating the automotive marketplace in brand loyalty, it is hard to imagine Tesla seeing any negative backlash at all when it comes to rapidly declining resale value due to price cuts.