Tesla Pressures Ford Again

Tesla has held the lead in electric vehicle (EV) sales in the United States for as long as most people remember. It has gone to great lengths to pad that lead with price cuts. Ford hopes to chip away at Tesla’s market share. That will be much harder as Tesla has cut the price of the Model 3 RWDs in inventory to about $30,000 after a federal credit. That brings the price below the median cost of a new car in the United States, which is about $40,000. Ford can expect Tesla may make a similar move when it launches its Cybertruck, which will compete, to some extent, with Ford’s EV flagship F-150 Lightning. (These are America’s 17 favorite pickup trucks.)

The new price cut for the Model 3 RWD was reported in several places. InsideEVs editor wrote: “For example, this Model 3 RWD located in New York City is now listed for $37,120, down from the regular price of $41,240.” It would be hard to find an example of a recent cut that is so aggressive.

The Cybertruck will be introduced later this year with a starting price of about $40,000. If Elon Musk follows his recent strategy, that price could be lowered after the Cybertruck reaches the market even though there are thousands of backorders for the vehicle. The lowest-priced Ford F-150 Lightning (PRO) has a manufacturer’s suggested retail price of $49,995. It may be eligible for the same tax credit that the Cybertruck is.

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One of Ford’s largest problems is that Musk’s decisions about pricing do not seem logical, at least outside his company. He appears ready to take his margins so low that they may be zero. Ford has lost billions on its EV ventures. It forecasts that its EV business will be profitable but could be compromised if it chases Tesla to the bottom.

Ford has been part of the car industry’s periodic discounts and incentives for decades. It is about to go down that hole again.

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