Jim Farley comments on recent Tesla price drops in Bloomberg

[roamtheworld]

https://www.bloomberg.com/news/arti...start-an-ev-price-war?leadSource=uverify wall
Ford Motor Co. Chief Executive Officer Jim Farley said rival Tesla Inc. could start a price war and turn certain electric vehicle models into commodities after it cut prices for the second time in a month this past week.

Tesla’s moves to bolster growth are “completely rational and should surprise no one,” Farley said at a charity event in Detroit. “Price wars are breaking out everywhere. Who’s going to blink for growth?”

The recent cuts hurt Tesla’s margins, sending shares into a tailspin. They are also reverberating around the auto industry as long-established companies race to catch up to the electric carmaker. The price reductions create challenges for rivals, who haven’t established supply chains and vehicle production as advanced as Tesla’s.

Tesla Sinks as Musk Eyes More Price Cuts Despite Margin Squeeze

Farley went on to say that Tesla CEO Elon Musk is using the Model T strategy employed by Ford founder Henry Ford, who cut the price of the Model T in half to protect market share. He was still passed up by Chevrolet, Farley said.

The other problem is that Tesla, by cutting prices on mid-sized crossover SUVs, could turn the industry’s most popular-sized vehicle into a commodity. Ford already reduced the price of its Mach-E electric crossover to match the Austin, Texas-based carmaker’s discounts. The Mach-E competes with Tesla’s Model Y.

Ford raised the price of its electric Lightning Pickup, for which Tesla has no direct rival, by 50% to $60,000 since it launched in April 2022.

Ford Slashes Electric Mustang’s Price in Response to Tesla


Farley said the key to avoiding price wars is offering products that have little or even no competition. Ford is already developing a second generation of its electric F-Series truck that will be manufactured at a new factory in Tennessee by the middle of the decade.

Pricing Pressure
Tesla cut prices of all models by about 20% this year as demand has softened. It’s also ramping up production at plants in Austin and Berlin, which will give it even more inventory to sell.

On the company’s earnings call, Musk indicated he would keep pricing pressure up, saying he was prioritizing sales volume over profits margins.

Tesla Started a China Price War That May Destroy Some Carmakers

“We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and higher margin,” he told analysts.

Tesla’s operating margin shrank to 11.4% in the first quarter, a roughly two-year low, after the company marked down its electric vehicles in January and March. Musk said he’s comfortable making less money on each car sold.

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[bnc734]

Thanks for posting, sounds like price cuts are coming again

 

[Guss-E 2021]

It still feels we are in the infancy of this game. The "early days" of the BEV transition. Not at all surprised things get bloody from time to time. The thing is, old companies like Ford and GM typically take the long view on what they do. You don't invest in something like Blue Oval City in reaction to one quarter's financial activity. The dust has far from settled and I'm hanging onto my Ford shares (hell Tesla doesn't even pay dividends ).

 

[kltye]

Farley said the key to avoiding price wars is offering products that have little or even no competition. Ford is already developing a second generation of its electric F-Series truck that will be manufactured at a new factory in Tennessee by the middle of the decade.

The key is to offer products that people actually want. Yeah, commodity products are boring, but if marketshare is what you're going for, then you'll need volume. I don't need another 10,000 lb truck with a 200kWh battery or another 6-figure luxury sedan.

 

[hartmms]

I'm not really sure Ford could keep up with the Mach E demand if they dropped prices again. They can't even keep up with the current demand. I wonder if that's why they had to close all ordering. They just don't have the manufacturing volume that Tesla has. I know they did some plant upgrades in Jan/Feb, but they only made 7k MME in March. Tesla made 440k M3+MY in Q1. Let's say 220k MY for Q1. Divide by 3 and thats 73k for March.

If I remember correctly, Ford wants to make 220k MME for 2023. Even if they hit that number, that's roughly only 25% of what Tesla is on target to make. It's a smart move to drop the price with their current manufacturing capability. I would think cars on the lots without markup will make a sale 90% of the time compared to a few cars on a lot with some "market adjustment + dealer fluff/options" with the average buyer.

 

[shelnian]

Tesla has continually decreased their manufacturing costs with in-house battery production, castings, much cheaper Chinese LFP batteries, etc. They can afford to reduce the price even further and still make money. The updated Model 3 & Y, coming in 2024, will be cheaper to manufacture & look a lot better and the new low priced model that will be built by the Mexico factory will really put pressure on all other car makers, including the Chinese EVs coming in the near future.
I don't consider the Model Y as a direct competition to the Mach-E, I think of it as a Toyota compared to a Lexus. The Mach-E will cater to people who are willing to pay a little extra for increased style and comfort, but aren't willing to pay for a Model S, Lucid Air, etc.

 

[samev]

The Mach-E will cater to people who are willing to pay a little extra for increased style and comfort

Such people would be in the minority and definitely not enough to drive MachE volume at prices above Model Y's. Remember Model Y's far superior OTA updates, phone and infotainment interface, faster supercharging network, sentry cam & live cam footage are just some of the features that most drivers would prefer over whatever Ford has to offer, including Bluecruise.

 

[roamtheworld]

Such people would be in the minority and definitely not enough to drive MachE volume at prices above Model Y's. Remember Model Y's far superior OTA updates, phone and infotainment interface, faster supercharging network, sentry cam & live cam footage are just some of the features that most drivers would prefer over whatever Ford has to offer, including Bluecruise.

Good points but many would argue that missing 360 camera view, Android Auto and Apple CarPlay the MY doesn’t check everything for everyone.
For me the real differentiator is Supercharging and its tight integration in the car. Everything else most other brands have or work almost as well as Teslas.
The current DCFC model has to be fixed ASAP because it just plain SUCKS right now!

 

[RickMachE]

Such people would be in the minority and definitely not enough to drive MachE volume at prices above Model Y's. Remember Model Y's far superior OTA updates, phone and infotainment interface, faster supercharging network, sentry cam & live cam footage are just some of the features that most drivers would prefer over whatever Ford has to offer, including Bluecruise.

IMO, that's a California opinion, where Tesla adoption is more widespread than elsewhere. Where Ford is big, and has plants, people have less interest in Telsa's.

Going to EV day tomorrow. Here's the registration:

 

[SWO]

Good points but many would argue that missing 360 camera view, Android Auto and Apple CarPlay the MY doesn’t check everything for everyone.
For me the real differentiator is Supercharging and its tight integration in the car. Everything else most other brands have or work almost as well as Teslas.
The current DCFC model has to be fixed ASAP because it just plain SUCKS right now!

IMO, supercharging is the only discriminator, and that advantage is going to decrease every year in the US. The government has picked CCS and the "Magic Dock" is an indicator that Tesla realizes this too, as it allows them to transition to CCS while also supporting legacy tesla vehicles.

I think Tesla will continue to lose market share (particularly with the S and X as consumers realize they aren't luxury vehicles) unless they come out with a compelling product.

 

[Ghost Ryder]

Crazy that Tesla is still has an 11% margin after the hefty price cuts. Ford meanwhile is loosing money on every EV it sells and still priced thousands above the equivalent Tesla. What's going to happen when the BYD and other Chinese EVs get here with even lower prices. Traditional automakers are in for a world of hurt.

 

[Ghost Ryder]

IMO, that's a California opinion, where Tesla adoption is more widespread than elsewhere. Where Ford is big, and has plants, people have less interest in Telsa's.

Going to EV day tomorrow. Here's the registration:

That's a really small sample size, but even with that, Tesla accounts for 10/17 cars there.

 

[theduke]

Good points but many would argue that missing 360 camera view, Android Auto and Apple CarPlay the MY doesn’t check everything for everyone.
For me the real differentiator is Supercharging and its tight integration in the car. Everything else most other brands have or work almost as well as Teslas.
The current DCFC model has to be fixed ASAP because it just plain SUCKS right now!

The rumor is that Bird's Eye 360 Camera view could be implemented by Tesla immediately, they just don't want to do it because someone else owns the patent (Nissan) and they would have to pay royalties for every car in the fleet. When the patent expires, I'm sure they will add it, as their current cameras support the feature, it's just not turned on.

 

[theduke]

IMO, supercharging is the only discriminator, and that advantage is going to decrease every year in the US. The government has picked CCS and the "Magic Dock" is an indicator that Tesla realizes this too, as it allows them to transition to CCS while also supporting legacy tesla vehicles.

I think Tesla will continue to lose market share (particularly with the S and X as consumers realize they aren't luxury vehicles) unless they come out with a compelling product.

At this time, Tesla only intends to open up ~10% of their Supercharger Network in the US. They know the advantage it gives them, and they will open some parts of it up to play nice, but there are no plans to open it all up.

 

[RickMachE]

That's a really small sample size, but even with that, Tesla accounts for 10/17 cars there.

True. Group was formed in the 1980s to support EVs. Third largest membership in the country, yet I've met maybe 8 people, all drive Tesla's, including one with the doors that rise up. They are Tesla geeks, which is probably why nobody else has joined (and mostly in their 70s and even 80s). They don't promo the event well at all, so mostly members come with their cars, not non-members.

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