Ford Has Bad News for EV Buyers

The legacy carmaker has just made a decision that its customers won’t like.

Ford  (F) – Get Ford Motor Company Report did not want to upset its customers and future buyers of electric vehicles. 

As consumers grapple with soaring prices for virtually everything from groceries to basic necessities to gallons of gas at the pump, the automaker has opted for a phased strategy to announce increases prices of its electric vehicles.

On August 9, the group from Dearborn, Michigan, announced an increase in the price of the F-150 Lightning, the electric version of the iconic F-150 pickup. These price increases were between $6,000 and $8,500 depending on the model. The base price of the F-150 Lightning model year 2023 thus climbed between $47,000 and $97,000, compared to approximately $40,000 to $92,000 for model year 2022 vehicles. These prices obviously exclude taxes, delivery and other charges.

The new prices did not affect customers who had already ordered the vehicle, Ford insisted. To explain its decision to raise prices, the carmaker said the cost of developing the battery has risen sharply.

Mustang Mach-E  Prices Increase

The cost of battery development has more than doubled since the coronavirus pandemic, research firm AlixPartners has calculated. This increase in costs is due to the disruptions caused to supply chains by the pandemic and the soaring prices of raw materials following the invasion of Ukraine by Russia.

The costs of the raw materials (cobalt, nickel, lithium) necessary in the development of an electric vehicle have on average increased by almost 144% in two years to $8,255 as of last May, according to a report published in June by AlixPartners. As of March 2020, these costs amounted to $3,381. The cost of developing the electric vehicle has increased by about $2,000 over the past two years, the research firm added.

Automakers have mostly chosen to pass these unexpected cost hikes on to consumers. Before Ford, Tesla  (TSLA) – Get Tesla Inc. Report, GM  (GM) – Get General Motors Company Report, Rivian  (RIVN) – Get Rivian Automotive Inc. Report raised the prices of their cars.

In an attempt to appease its customers, Ford has made some updates to the F-150 Lightning. The group is taking orders again after being overwhelmed by high demand.

The new base F-150 Lightning will be able to travel 240 miles on a single battery charge, 10 miles more than the first models. As for the F-150 Lightning with a large battery, the battery range will now be 320 miles. Ford also now offers new colors.

The company led by Jim Farley has just taken up the same strategy for the full electric crossover Ford Mustang Mach-E. Ford has just announced price increases ranging from $3,200 to $8,675 depending on the variant chosen by the customer for the Mach-E model year 2023.

The base price of the entry-level Mustang Mach E goes from $44,995 for a 2022 model year vehicle to $48,195 for a 2023 model year vehicle. The base price of the standard range Premium RWD variant is now $58,975 compared to $52,900 for the 2022 model year vehicle. The base price of the Ford Mustang Mach-E Premium eAWD Extended Range is now $67,575 compared to $58,900 for the 2022 model year vehicle.

‘Significant Cost Increases’

This price hikes reflect “significant material cost increases, continued strain on key supply chains, and rapidly evolving market conditions,” said Ford. 

The new prices will take effect for all orders placed from August 30, says Ford, which will also reopen orders for this vehicle.

“We’re sharing these changes ahead of re-opening order banks on Tuesday so customers can understand the feature and pricing adjustments around ordering a Mustang Mach-E,” said Marin Gjaja, chief customer officer of the model E division said.

As with the F-150 Lightning, Ford has tried to assuage potential customer anger by saying that customers will have 90 days to test the BlueCruise hands-free driver-assistance system and decide whether to subscribe to it.

The Blue Oval also offers new colors to customers, while the battery of certain models gains more autonomy.

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