Ford Slashes F-150 Lightning Prices to Catch up with Tesla in Electric Vehicle Market Race
July 19, 2023
As the competition for market share in the electric vehicle sector intensifies, Ford Motor (F) is striving to compete with Tesla (TSLA). In an effort to stay competitive, Ford has significantly reduced the prices of its F-150 Lightning electric truck. This move comes as the automaker capitalizes on expanded plant capacity, reductions in raw material costs for batteries, and continuous improvements in production scalability. Ford’s strategy involves improving accessibility, reducing prices, and decreasing the waiting period for the F-150 Lightning.
Recent Developments at Ford
Ford has been tirelessly working to upgrade its Michigan plant to triple its annual production rate. The target is to manufacture 150,000 F-150 Lightning trucks starting this fall. These enhancements are set to make built-to-order trucks more readily available as early as October. In terms of pricing, the revised rates for the F-150 Lightning are as follows: Pro MSRP has been cut to $49,995 from $59,974; XLT 312A Extended Range MSRP has been reduced to $69,995 from $78,874; Platinum Extended Range MSRP has been lowered to $91,995 from $98,074.
CFRA highlighted that the launch of the F-150 Lightning has been sluggish, impeded by battery-related issues. This resulted in only approximately 4,500 units being delivered in the second quarter. Ford’s recent price reductions closely follow Tesla’s announcement that the first Cybertruck had just come off the assembly line days before. “Ford hears the footsteps of Cybertruck and Rivian (RIVN),” commented Wedbush analyst Dan Ives. In the past, Tesla has made aggressive price cuts across its portfolio to stay ahead in the increasingly competitive market. Responding to this, Ford had also reduced the price of its Mustang Mach-E electric SUV by up to $6,000.
SA analyst Jordan Sauer suggests that investing in Ford carries risks due to its high leverage. However, he believes Tesla’s valuation is not commensurate with its underlying growth potential. Despite these concerns, he would still choose Ford over Tesla, noting, “Ford is generating excitement with its new offerings, and I have it handily outperforming Tesla from here.” On the other hand, Pearl Gray Equity and Research believes that Ford is undervalued. They argue this is driven by increasing consumer demand and strong government support.