Ford Reduces Cost of F-150 Electric Model by up to 17%

In an effort to counter the emerging competition from Tesla Inc. and General Motors Co., Ford Motor Co. is reducing the prices of its popular F-150 pickup’s electric variant by up to 17%.

The F-150 Lightning Pro, the cheapest version of the electric car aimed at commercial buyers, now starts at $49,995. That’s about $10,000 less, but still more than the original $39,974 starting price when it went on sale in April 2022. The most affordable consumer model, the XLT, has also been cut by about $10,000 and now starts at $54,995.

The cuts Monday reverse roughly half of the price increases Ford implemented on its battery-powered truck last year. CEO Jim Farley previously boasted that Ford raised Lightning prices while Tesla lowered prices on its models.

“We’re sold out and we’ve raised the price by $11,000,” Farley said at a Morgan Stanley conference in May. “So far so good, but the competition will be 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 platform earlier this year, and Tesla, which revealed over the weekend that it has built its first Cybertruck. Next year, Stellantis NV is scheduled to begin building its electric Ram minivan, known as the Revolution.

“The electric car market is changing rapidly, and we must adapt to remain competitive,” said Martin Gunsberg, a Ford spokesman.

Investors reacted negatively to the price cut on Monday, sending Ford shares down as much as 5.5 percent on concerns about how the change would hurt profits.

“The market is really jittery because they see this Ford chasing Tesla, especially with the Cybertruck going into production,” said Morningstar Inc. analyst David Whiston. “But this is straight out of Tesla’s playbook of starting high and coming down as they scale. Everyone liked it when Tesla did that, so it’s not fair to punish everyone else when they do it.

Ford also added incentives to the F-150 Lightning for the first time, offering a $1,000 rebate if buyers spec their truck online and offering 1.9 percent discounted financing for 36 months to qualifying buyers.

The automaker has more room to lower prices due to lower battery costs and economies of scale, it said in a statement on Monday. It blamed rising material costs and supply shortages for last year’s price increases.

The price cuts could add to the skepticism Wall Street has expressed about Farley’s goal of achieving an 8 percent return before interest and taxes on Ford’s electric car business by the end of 2026. The automaker has said it expects to lose $3 billion from its electric car unit. This year.

“Skepticism can grow,” Whiston said. “But the plan that Ford has laid out is based on improving margins as they achieve scale. And to achieve scale, you need volume, which means selling vehicles for less than $70,000 to $98,000.

In January, Ford lowered the prices of its electric Mustang Mach-E SUV after Tesla dropped the prices of its models.

The price cuts still leave the electric F-150 well above its gasoline-powered counterpart. The gas-powered XLT model starts at $41,800, while the electric version is nearly $55,000, according to Kelley Blue Book car buying guide editor-in-chief Brian Moody.

“They’re priced like luxury cars,” Moody said of electric vehicles. “One of the biggest barriers – and perhaps the barrier – to electric car ownership is price. All electric cars need to be much more competitive in price.

Another consumer benefit of the price cuts is that several Lightning models will likely qualify for a $7,500 tax credit under President Joe Biden’s Inflation Reduction Act, Moody said.

Ford also said in a statement Monday that it has 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 was shut down at the end of June and will come back online this fall, Gunsberg said.

According to Cox Automotive, the F-150 Lightning ended June with 88 days of delivery. That’s more than the industry-standard 60-day supply, but was below the inventory level for all F-Series trucks, which Cox said was more than 100 days at the end of June.

Rising inventories and increasing competition will continue to push prices down, Moody said.

“The more these types of vehicles come to market, the more choices consumers have,” Moody said. “And then all the more car manufacturers have to compete on price.”