Ford is once again cutting the price of its electric SUV, the Mustang Mach-E, as it ramps up its price war with Tesla.
Tesla, the leader in EV sales by a large margin, has cut prices six times so far this year. Its price cuts have eaten into its industry-leading profit margins and added pressure to its stock price.
Ford’s price cuts for the Mach-E come to $3,000 to $4,000 for most models, or about 6%. It’ll put the sticker price at between $43,000 and $60,000. It also said it would increase production of the Mach-E in the second half of this year.
Ford cut the price of the Mach-E in January but it has not announced price cuts for its other electric vehicles, including the F-150 Lightning pickup. Tesla has yet to deliver its first electric pickup, due out later this year.
Tesla’s profit margins have been falling, because it sells only EVs. But Ford still gets the overwhelming majority of its sales from its profitable sales of gasoline powered cars and trucks. So it was able to report improved results even with the EV price cuts announced earlier.
And on Tuesday, Ford stuck with the full-year earnings guidance it issued in March despite the new price cut. Even with the EV losses, Ford confirmed its earlier guidance that it expects to earn between $9 billion and $11 billion on an adjusted basis this year. The EV sales at Ford are still a fraction of its overall sales and pricing changes don’t move the profit needle the way it does at Tesla.
Ford is still losing money on its EV sales. It said Tuesday it expects to lose about $3 billion before taxes, interest and depreciation from its electric vehicle division during the year, but that’s the same guidance it gave when it met with investors in March and broke out the results for that segment for the first time. It lost $722 million on that basis from EVs in the first quarter.
Overall, Ford’s profit for the first quarter was much better than expected. It earned $2.5 billion, or 63 cents a share, up nearly $1 billion from what it earned on that basis a year ago. That was far better than the 41 cents a share earnings forecast by analysts surveyed by Refinitiv.
Sales grew 20% to $41.5 billion, fueling the stronger than expected results. While revenue from the EV segment fell 27%, that segment only had sales of $700 million, a fraction of its overall revenue. Overall, the number of EVs Ford sold fell 32% to 12,000, despite the lower pricing for the Mustang Mach E. Tesla sales have increased after it lowered prices.
Ford sold 1.1 million total vehicles in the quarter, up 9%.
Shares of Ford
(F) fell 2% in after hours trading, despite the strong results and unchanged earnings guidance.