Electric SUVs Are Getting Cheaper as Ford and Tesla’s Price War Ramps Up
Ford just slashed the price of the electric Mustang Mach-E SUV by up to $4,000 as it jockeys for market share with Tesla, which briefly had more attractive pricing for its Model Y SUV.
The base price of the Mach-E is now $42,995, down from $45,995 before the latest price cut. The Mach-E qualifies for up to $3,750 of federal EV tax credits, which can essentially bring the price down to $39,245.
This is the second price cut on the Mach-E so far this year. Ford lowered prices in January by $600 to $5,900 depending on the trim, just a few weeks after Tesla announced its first (and largest) round of what would turn out to be many price cuts in 2023.
For the first few months of the year, the Mach-E — and many other EVs — were eligible for a $7,500 federal EV tax credit during a grace period when the government wasn’t enforcing battery rules to claim the full incentive. On April 18, those rules came into effect and a number of EVs including the Mach-E lost eligibility for half of the tax credit, while others become completely ineligible.
Ford's decision to lower the price of the Mach-E appears to be fallout from the implementation of the new battery rules. The Mach-E's biggest competitor in the electric SUV market, the Model Y, remained eligible for the full $7,500 credit, which briefly made it cheaper than the Mach-E.
EV price war continues
Ford's new Mach-E price cuts range from $1,000 to $4,000 depending on the trim, and they make the SUV slightly less expensive than the Model Y.
- Tesla has been tinkering with its prices so much that it’s become hard to keep track. After the company’s latest move to increase the base price of the Model Y by $250 on Monday, the vehicle starts at $47,240. Subtracting $7,500 from that price — because the Model Y qualifies for the full EV tax credit — the cost comes down $39,740.
- At a net cost of $39,245, the base Mach-E model is now effectively $495 cheaper than the base Model Y for qualifying buyers, which could help make the Ford more attractive to EV shoppers choosing between the two popular electric SUVs. In 2022, the Model Y was the best-selling EV in the U.S., while the Mach-E ranked third.
- This week, Tesla, in addition to slightly raising some of its prices, reopened ordering for the long range trim of its Model 3 sedan for the first time since August. The new price has been greatly reduced to $47,240, and the vehicle qualifies for up to $3,750 of tax credits, which can lower the cost to $43,490.
- In August, when Tesla paused ordering for this long range trim due to a supply-demand imbalance, the price was $57,990. That means that in a relatively short amount of time, the price has essentially fallen by $14,500, a staggering illustration of just how much more affordable some EVs have become thanks to the price war and the introduction of tax credits in January.