Tesla raises price of Model Y, Ford won’t do same for Mustang Mach-E

After making headlines for price cuts on its electric vehicles in January, Tesla reversed course and raised the price of its Model Y late Friday after the U.S. government relaxed regulations for electric vehicle tax credits.

But Ford is not planning to raise the Mustang Mach-E price or change plans to offer a price break to recent buyers, Ford spokesman Marty Gunsberg confirmed to the Detroit Free Press on Saturday.

Executives for the Dearborn automaker have said in recent days the company is committed to gaining market share and going head-to-head with the top-selling electric automaker.

And that means a price war.

Industry analysts see the Tesla Model Y and Ford Mustang Mach-E as competing for the same buyer.

The cost of the Model Y Long Range has increased by $1,500 to $54,990, while the Model Y Performance is up $1,000 to $57,990, according to the company website. Tesla notes on its site that a $7,500 federal tax credit is in effect for deliveries until March 2023.

Tesla decreased and then increased the price of its Model Y. The cost of the Model Y Long Range has increased by $1,500 to $54,990, while the Model Y Performance is up $1,000 to $57,990. The SUV competes with the Ford Mustang Mach-E.

Chief Executive Officer Elon Musk said last month on the company’s quarterly earnings call that price cuts had led to a surge of demand, and that Tesla had “actually raised the Model Y price a little bit in response to that,” Bloomberg reported.

Ford dropped the price of the 2023 Mustang Mach-E SUV by $600 to $5,900, depending on the model, which now can range from $46,000 to $64,000. Its average transaction price from October through December 2022 was $59,431, according to Cox Automotive.

The 2023 Mustang Mach-E Premium Edition recently saw its price cut $3,980 to $50,995.

The Model Y price adjustment comes after the Biden administration qualified more vehicles for the tax credit. The U.S. Treasury Department announced Friday that it had broadened the definition of a sport utility vehicle to allow more consumers to take advantage of the federal tax credit.

Under the Inflation Reduction Act, sport utility vehicles costing up to $80,000 can now qualify for tax credits.

More vehicles built by Tesla, Ford and General Motors will qualify.

More:Ford CEO Jim Farley says only 1 company is challenging Tesla right now

Ford CEO Jim Farley tweeted Friday evening: “Appreciate @USTreasury’s consideration and hard work to help more customers access clean vehicle tax credits under the Inflation Reduction Act. With this change, more @Ford PHEV and EV models are eligible like the @LincolnMotorCo Corsair, Ford Escape and Mustang Mach-E.”