Ford Motor Co. expects auto prices to fall by more than 5% this year and next as dealer inventories grow, and the competitive pressure will take a toll on Tesla Inc.’s dominance of the electric vehicle market.
(Bloomberg) — Ford Motor Co. expects auto prices to fall by more than 5% this year and next as dealer inventories grow, and the competitive pressure will take a toll on Tesla Inc.’s dominance of the electric vehicle market.
“They’ve had the market to themselves, they had a big head start,” Jim Farley, Ford’s chief executive officer, said of Tesla in an interview on Bloomberg Television Monday. “And now they’re seeing a lot more pressure.”
Ford plans to boost spending on marketing its traditional internal combustion engine vehicles in response to falling prices, Farley said. The automaker is depending on gasoline-fueled models like the F-Series pickup truck and Bronco sport-utility vehicle to finance its $50 billion plan to roll out EVs.
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“We’re going to have to spend more this year and prices will come down,” Farley said. On gasoline fueled models “we’ve under-invested in advertising.”
Farley is attempting to convince skeptical analysts that the automaker can generate an 8% return on electric vehicles before interest and taxes by the end of 2026, when it also plans to be producing 2 million EVs annually, a 16-fold increase from last year. He is hosting them Sunday and Monday at Ford’s Dearborn, Michigan, headquarters for two days of driving and discussions about the company’s EV plan.
Wall Street needs a lot of convincing. Ford projects losses of $3 billion in its EV unit this year. Meanwhile, Tesla continues to dominate the US market and has been cutting prices, forcing Ford and others to follow. And while Ford shows promise with its Mustang Mach-E electric SUV and F-150 Lightning plug-in pickup, the automaker continues to struggle with high costs and spotty quality.
Doubts about Ford’s EV ambitions have weighed on the company’s stock, which is little changed this year, compared to about a gain of more than 9% for the S&P 500. The stock rose less than 1% in premarket trading Monday in New York.
–With assistance from Matthew Miller.
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