Price Relief: Ford CEO Plans a 5 Percent or More Price Cut Across All Models
Dealer inventories are beginning to rise again, and Ford is planning to respond with a significant price cut for all models in the coming year.
Prices of new vehicles have been increasing quite a bit over the last couple of years. This is not unique to Ford. All manufacturers have had to deal with supply chain disruptions and raw material shortages. This among other things has made the Ford truck more expensive lately. But finally, we have some good news. Ford CEO Jim Farley recently announced in an interview with Bloomberg’s Matt Miller that a price cut of 5 percent or more will be coming to all Ford models. Five percent might not sound like much but on a $57,000 F-150, a 5 percent price cut is $2,850 dollars. And if you factor in the fact that interest rates are high right now, that price cut could save you well over $3K over the course of a loan. Not bad.
A price cut is always welcomed, but that was not all that Farley discussed. He also went into some detail around how the company plans to meet their EV build goals. Ford hopes to build 2 million electric vehicles in 2026. How will Ford get all the materials they need in order to build this many EVs? It is a lofty goal, and the resources are limited. To say nothing of the fact that right now China controls the market on EV battery production. We will take a closer look at what Farley sees as far as pricing and EV production.
Price Cut
Farley said a 5 percent plus price decrease is likely. The reason is that dealer supply is finally growing again. For quite a while a Ford dealership lot looked like a ghost town. There were just no new cars or trucks in inventory. And while Farley doesn’t think we will ever again see the 100 days+ supply of inventory, 50 days supply looks reasonable. That puts downward pressure on prices. As does the model age of the products. Although this does not really play much of a role in Ford pricing because most of their lineup is nearly brand new at this point.
EV Truck Price Reductions
The Ford price reductions will be across the board. However, Farley did mention that in the EV truck space there is not as much competition. So, there is not as much pricing pressure for those models. We have reported here previously the significant prices hikes related to the Ford Lightning. Hopefully this begins to reverse itself a bit, but it is highly unlikely that the price will be reduced back to the original levels.
Building EVs
How is Ford going to get the materials to build 2 million EVs by 2026? Farley feels that material mining is not really the issue. The issue is in the processing of those materials and turning them into batteries. Ford believes they have all the mining capacity in place to build those two million EVs. But the processing remains an issue. 80 percent of the processing for nickel and lithium is currently being done in China. Ford wants to bring more of that to North America. But another big challenge is scaling up to build high quality batteries in large numbers. Ford believes they have a plan to do this. Time will tell. In the meantime, we will keep our eyes peeled for falling prices.
Images: Ford
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