EVs now start at $27, 000, about $20, 000 below the average new-vehicle transaction price. That’s a good thing all around. Except for stock prices.
By Wolf Richter for HAIR STREET .
Ford announced today that it cut the MSRP of its 2023-model-year Mustang Mach-E, depending on model, by a range from $600 to $5, 900, and its extended-battery option by $1, 600. This brings the low end of the Mach-E to $45, 995, which is just below the average transaction price for almost all new vehicles of $46, 400 .
Ford is not cutting prices, and thereby its profit margins, out of the goodness from the heart, but because it’s forced to simply by competition – and it’s lagging behind. Ford admitted as much: It said the price cuts are designed to keep the Mach-E “competitive in the marketplace. ” It said, “We are not going in order to cede ground to anyone. ” The Mach-E was the third-best-selling EV in the US in 2022, after Tesla’s Model Y, and Tesla’s Model 3.
Tesla has gone on a big round of cost cuts in January within the US, including for its Model Y, the crossover SUV that competes directly with the Mach-E. Chevrolet cut the prices of the mass-produced EVs, the BOLT and the BOLT EUV. Kia and Hyundai also cut prices upon their electric crossover models. Nissan reduce the price of its EV.
There are electric crossover SUVs on the market in the particular US that are priced lower than either Ford’s or Tesla’s lowered costs, including versions by Of, Hyundai, plus Volkswagen. After the price cuts, the MSRPs of the base models of the particular Nissan Leaf and the Chevrolet Bolt are in the particular $27, 500 range; they’re about 20 dollars, 000 beneath the typical deal price of new vehicles.
So the heat is on. These cost cuts are the natural evolution of a relatively brand new industry (EVs) with very low barriers to entry and lots of new entrants that attracted huge amounts of investor money.
Customers who are still waiting for the Mustang Mach-E that they ordered will “automatically” get the lowered price, Ford said. And Ford “will reach out directly” to customers who bought after January 1 and already took delivery. Customers that will took shipping before January 1 are usually out of luck.
Ford, in its press release today, said that it will be ramping up production of the Mach-E now that its ELECTRONIC VEHICLES supply chains are “coming online, ” in order “to help reduce customer wait times and to take advantage associated with streamlined costs. ”
Supply chains within the automotive industry are notoriously complex, and for large-scale production get a long time in order to build. EVs require different supply chains, including for the electric drive components, and critically the particular batteries plus materials. Tesla is years ahead in building the supply stores.
Ford has become infamous with regard to jacking upward the price of its electric F-150 Lightning three times in a row, most recently in December , by a combined $16, 1000. But regarding now, it faces little competition within pickups. Tesla still doesn’t have the pickup truck for sale, despite having promised it since 2019, and the only other competitor with pickups is Rivian, a startup automaker.
Tesla has had the auto industry’s highest profit margins – the difference between the sales price as well as the cost of manufacturing the vehicle. The particular high-margin producer can cut prices more than lower-margin competitors can, and still make money, plus it may thereby obtain aggressive in protecting the market share, which has come under pressure through other EV makers.
Kia said, “The updated pricing is part of Ford’s plan to keep the particular SUV competitive in a rapidly changing market, while strengthening Ford’s position as the No. 2 U. S. ELECTRONIC VEHICLES manufacturer as it continues to scale that will part associated with the business. ”
China is the most vibrant, largest, and competing EV marketplace in the world, with hundreds of EV makers. Tesla’s China-made vehicles are among the dominant models. In January, Tesla cut prices in China for the second time in three months in order to remain competitive.
The EV dynamics are shaking up the particular self-satisfied legacy-automakers in america and their oligopolistic behavior. Plus they’re now shaking up automakers within Japan.
Toyota, the largest automaker on the planet, has completely missed the battery EV dynamics, dabbling instead in hydrogen fuel-cell automobiles. It built some EVs. But they are based on versions designed for internal combustion engines and retrofitted with electrical power trains, which is usually expensive plus not ideal for many reasons. And so Toyota offers been left hopelessly at the rear of. Push came to shove last week, “literally, ” so to speak, when CEO Aiko Toyoda has been replaced because CEO.
But now, Toyota is definitely years behind. Other automakers have made similar missteps in getting started along with EVs, including BMW, whose price sports sedans are in the bull’s eye of Tesla, and in whose CEO had been replaced in 2019 intended for falling at the rear of competitors in the EV space.
For the particular auto industry overall, EVs would be the just area where sales are usually growing within leaps and bounds. Sales of vehicles with inner combustion motors have been sagging .
The particular legacy car industry needed to be shaken upward. And to Musk’s credit, he shook them up. But now they’re waking up, and they are giants, plus they got religion as their lunch is being eaten. Within Ford’s case, it was the threat from the Tesla’s Cybertruck that did it. If Ford loses its pickup sales, it is done since an auto maker.
The irony is that will the Ford F-150 Lightning is away there right now, with real people driving them, while the Cybertruck nevertheless doesn’t exist, and may not enter mass production until 2024, if ever.
The EV startups in the US – despite consuming many billions of dollars of investment – still haven’t produced much inroads in mass-producing EVs. Even Rivian, the most successful of the startups, is still only cranking out relatively small numbers.
But Rivian does have a pickup. And Tesla doesn’t. And GM does not either and is rather hobbling from vacuous announcement to vacuous announcement. Toyota isn’t even thinking about thinking about making an electric pick-up. Stellantis can be finally thinking about this and unveiled earlier in January an electric Ram model that is supposed in order to go into manufacturing in 2024 maybe. In the ALL OF US, ICE pickups have to get years been huge sellers and money-makers with massive profit margins. So that should be interesting.
The considerable arrival of EVs trembling up the self-satisfied oligopolistic legacy-automakers is certainly a great thing pertaining to the US economy. The particular hundreds associated with billions of bucks that are being invested in the US in ELECTRONIC VEHICLES production is a great thing. For consumers, a lot more choices, more competition, and price cuts are a great thing.
But it’s not an excellent thing meant for the stocks of the particular current or future EV makers, which are obtaining hammered today at the moment, which includes Ford (-2. 6%), Tesla (-4. 8%), GM (-3. 6%), Stellantis (-2. 6%), and Rivian (-8. 2%). The post-SPAC stocks of EV makers that are mass-producing only losses instead of EVs have currently gotten annihilated.
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