Tesla's pricing potentially can start an EV war: Ford CEO

Tesla has announced price reductions of about 20 per cent on all its models and is also ramping up production in its Austin and Berlin manufacturing u
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File photo of Jim Farley. ( Used for representational purpose) (REUTERS)
File photo of Jim Farley. ( Used for representational purpose)

For the past few months Tesla has been on a price cut spree and taking note of that, Ford's Chief Executive Officer Jim Farley recently stated that this could start a price war and can potentially turn a few electric vehicles into commodities. The recent price cut by Tesla has created a buzz in the auto industry compelling many long-established companies to come at a level with the EV company.

These price reduction announcements from Tesla are also creating challenges for rival companies that are still in the process of establishing their production and supply chains. Focusing on these lines, Farley stated that Tesla's decisions to push its growth are rational. “Price wars are breaking out everywhere. Who’s going to blink for growth?" He added. The Ford CEO also shared that Tesla CEO Elon Musk is using the Model T strategy which was once implemented by Ford founder Henry Ford who cut the price of the Model T in half to protect market share.

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Farley shared a concern that Tesla's price reduction of its mid-size crossover SUVs can turn the auto industry's most popular-sized vehicle into a commodity. Ford's Mach-E electric crossover which competes with the likes of Tesla Model Y has already registered a price cut to match the latter's price range. On the other hand, Ford has increased the price of its electric Lightning Pickup. Currently, this EV from Ford does not have a direct rival from Tesla. The electric truck was launched in April 2022. The CEO added the key to avoiding price wars is offering products that have little or even no competition.

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Tesla has announced price reductions of about 20 per cent on all its models and is also ramping up production in its Austin and Berlin manufacturing units. Musk has indicated he would keep pricing pressure up. He also added that he is prioritising sales volume over profit margins.

First Published Date: 21 Apr 2023, 16:34 PM IST
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