As Tesla's electric vehicle price war heats up in North America, Ford significantly slashed the price of its popular electric F-150 Lightning truck on Monday, with the base model seeing a nearly 17% price reduction.
Specifically, the base Pro model's price has been lowered to $49,995 from its previous price of $59,974, a 16.6% decrease. The higher-end Platinum model saw about a 6.2% price reduction to $91,995.
In the past, Ford has repeatedly increased the price of its electric pickup truck, with the last increase happening in March this year. Ford announced then that the base Pro model's price was increased from $55,974 to $59,974, not including the $1,895 shipping fee. This marked a $20,000 increase from the $39,974 price when it was launched in May 2021. Other models such as the Lariat and Platinum also saw varying degrees of price increases.
Ford stated the latest price cut was due to improved scalability and reductions in battery raw material costs. Marin Gjaja, Chief Customer Officer at Ford Model e, explained that not long after the launch of the F-150 Lightning, cost increases due to rising material costs, supply constraints, and other factors had inflated the cost of the electric truck for both Ford and its customers. He emphasized the company's ongoing efforts to increase accessibility and affordability, helping customers by lowering prices and shortening wait times for the new F-150 Lightning.
Rising prices of battery raw materials have been a significant factor in driving up the prices of electric vehicles. However, the prices of important raw materials such as cobalt and lithium have started to decrease. Analysts anticipate that the cost of bulk commodities will drop further in the second half of the year. Furthermore, Ford has expanded its purchasing options to control costs. Earlier this year, the company announced a new battery-grade lithium supply agreement, aiming to produce 2 million electric vehicles by 2026.
The price drop comes at a time when Ford's electric vehicle sales are flagging. As of the quarter ending in June, Ford's electric vehicle sales had fallen by 2.8%. Tesla's prior initiation of the electric vehicle price war has clearly had a negative impact on other automakers.
In contrast to Ford and other car manufacturers, Tesla, thanks to several price cuts and federal electric vehicle tax credit benefits, delivered more than 466,100 vehicles to customers worldwide in the second quarter, an increase of 83% year-on-year. Tesla's vehicle production in the second quarter was 479,700 units, a year-on-year increase of 85.5%.
Ford's decision to cut electric pickup prices coincides with the launch of Tesla's first Cybertruck. On July 15, Tesla announced on Twitter that its Texas Gigafactory had completed the first Cybertruck. The latest official statement regarding Tesla's timeline plans for deliveries to begin around the end of the third quarter. Tesla CEO Elon Musk had previously indicated that they could produce around 250,000 Cybertrucks annually, later adding that the number could potentially be between 250,000 and 500,000 units.
Pickup trucks account for 20% of the U.S. auto market. If Tesla's Cybertruck price is comparable to current pickup truck prices on the market, then the Cybertruck could very well be Tesla's ticket to a sizable share of the pickup segment. This undoubtedly poses a major threat to Ford's vehicle lineup.
The Wall Street Observer website previously analyzed that in the face of Tesla's price war, Ford's electric vehicle business was "most injured." Ford's electric vehicle losses expanded to $2.1 billion in 2022, and its EV business lost $700 million in the first quarter of 2023. For the full year of 2023, Ford estimates the losses from its electric vehicle business will expand to $3 billion.
While enduring losses and slashing prices, Ford's stock fell nearly 6% on Monday, with General Motors falling approximately 3%, and Rivian, which had seen a ferocious rebound in the preceding days, falling about 3.5%.
