Ford Motor is slashing prices on the electric version of its best-selling F-150 pickup by as much as 17%, as it moves to fend off new competition coming from Tesla and General Motors.
The F-150 Lightning Pro, the cheapest version of the electric truck aimed at commercial buyers, now starts at $49,995. That’s down about $10,000 but still above the original starting price of $39,974 when it went on sale in April 2022. The lowest priced model aimed at consumers, the XLT, was also cut about $10,000 and now starts at $54,995.
The cuts Monday reverse roughly half the price hikes Ford had implemented on its battery-powered truck over the last year. Chief Executive Officer Jim Farley previously boasted that Ford was raising prices on the Lightning while Tesla cut prices on its models.
“We’re sold out and we’ve increased the price by $11,000,” Farley said at a Morgan Stanley conference in May. “So far, so good, but the competition is going to get really exciting here by the end of next year.”
Ford is acting in part to get ahead of GM, which began building an electric version of its Chevrolet Silverado pickup earlier this year, and Tesla, which revealed over the weekend that it has built its first Cybertruck. Next year, Stellantis NV is due to begin building its electric Ram pickup, dubbed the Revolution.
“The EV market is rapidly changing and we need to adapt to remain competitive,” said Martin Gunsberg, a Ford spokesperson.
Investors reacted negatively to the price cuts Monday, driving down Ford shares by as much as 5.5% on concern over how the move would cut into profit.
“The market is really freaking out because they see this as Ford chasing Tesla, especially in light of Cybertruck production starting,” said David Whiston, an analyst with Morningstar Inc. “But this is straight out of the Tesla playbook of starting high and coming down as they got more scale. Everyone loved it when Tesla did, so it’s not fair to punish everyone else when they do it.”
Ford also added incentives on the F-150 Lightning for the first time, offering $1,000 off if shoppers configure their truck online and providing cut-rate financing of 1.9% for 36 months to buyers who qualify.
The automaker has more room to cut prices because of lower battery costs and scale economies, it said Monday in a statement. It blamed rising material costs and supply shortages for the price hikes last year.
The price cuts may add to skepticism Wall Street has expressed on Farley’s goal to achieve an 8% return, before interest and taxes, on Ford’s EV business by the end of 2026. The automaker has said it expects to lose $3 billion in its EV unit this year.
“The skepticism could increase,” Whiston said. “But the plan Ford laid out hinges on margins improving as they achieve scale. And to achieve scale you need volume, which means selling vehicles at less than $70,000 to $98,000.”
In January, Ford cut prices of its electric Mustang Mach-E SUV after Tesla dropped the prices on its models.
The price cuts still leave an electric F-150 well above its gasoline-fueled counterpart. A gas-powered XLT model starts at $41,800, compared to nearly $55,000 for the electric version, according to Brian Moody, executive editor of the Kelley Blue Book car-buying guide.
“They’re priced like luxury cars,” Moody said of electric vehicles. “One of the biggest barriers — and maybe the barrier — to EV ownership is price. All electric cars have got to be a lot more competitive on price.”
Another consumer benefit of the price cuts is that more Lightning models are likely to qualify for the $7,500 tax credit under President Joe Biden’s Inflation Reduction Act, Moody said.
In a statement Monday, Ford also said it had temporarily closed its Rouge Electric Vehicle Center in Michigan to expand the plant’s production of F-150 Lightning models to 150,000 vehicles a year starting this fall. Production ceased in late June and will come back online this fall, Gunsberg said.
F-150 Lightning ended June with 88 days supply, according to Cox Automotive. That’s above the industry standard of 60 days supply, but was below the overall inventory level for all F-Series trucks, which stood at more than 100 days at the end of June, according to Cox.
Rising inventories and more competition will continue to drive down prices, Moody said.
“The more of these type of vehicles come on the market, the more choices consumers will have,” Moody said. “And then the more the automakers will have to compete on price.”
