Ford tried really hard to be Tesla, and by most accounts, so far, it hasn’t quite worked. Ford attempted to copy Tesla’s script for selling electric vehicles, according to Bloomberg: ramp up production, leverage economies of scale to lower costs, and make vehicles affordable enough for a mass market.
It’s a plan that has worked out really well for Tesla. The outlet reports that the company’s stock has more than doubled in 2023, even as it has cut the prices of its cars. Ford, on the other hand? Well, things haven’t gone so well. The Blue Oval did something similar, and it wiped out about $US3.6 billion in market value in just one day.
According to Bloomberg, Ford has announced it is going to triple the production rate of its F-150 Lightning electric pickup, which was initially supposed to sticker at around $US40,000. Prices never really got close to that, though. The COVID-19 pandemic led to parts shortages and inflation issues that saw the F-150 Lightning get more expensive. Now, Ford is finally cutting Lightning prices by thousands of dollars in an attempt to maybe get costs back where they should be.
Investors didn’t like the move of cutting prices by as much as 17 per cent, apparently. Ford shares dropped 5.9 per cent — its biggest drop in five months, according to Bloomberg. It should be noted that even with those cuts, Ford is still charging about $US10,000 more per truck than it initially planned. Even Tesla CEO Elon Musk is calling the F-150 Lightning expensive.
It should definitely be noted that Ford’s Lightning price cuts also coincide with Tesla announcing it had started production of its Cybertruck about two years behind schedule. At the same time, Rivian is reportedly ramping up output of its R1T pickup.
Ford is counting on demand for combustion F-Series trucks — the top-selling vehicle line in the US since the Reagan administration — carrying over to the electric versions. In addition to targeting a 150,000 annual run rate of F-150 Lightning output after its Michigan factory reopens next month following a few weeks of downtime, a second-generation electric pickup will go into production starting in 2025. The new factory for that model, sprouting up in Tennessee, will have the capacity to make half a million vehicles a year.
That’s what may have been most unsettling of all about Ford’s announcement for investors — that the company would drop prices this much and this early in its transition to electric trucks.
Investors fear this fits recent noted themes of high US EV inventories,” an industry analyst told Bloomberg. “Time will tell if the Ford price cut was demand or supply.”
That being said, the analyst did say it was probably a little bit of both. If Ford has taught us anything, it’s that it ain’t easy bein’ blue.