A little over two weeks after Tesla shocked car shoppers with an unprecedented round of price cuts on its electric cars, Ford has countered with a price drop on its Mustang Mach-E electric SUV. The move may come partly in response to Tesla, but it’s equally likely that they made the decision for the same reason Tesla did: tax rules. We’ll explain.
A Tesla Model Y Rival With a Famous Face
The 2023 Ford Mustang Mach-E is an all-electric SUV meant to rival the Tesla Model Y, borrowing its name and vibe from one of America’s most famous muscle cars.
By the end of 2022, it had become America’s third best-selling electric vehicle (EV), behind Tesla’s Model Y and Model 3.
The Mach-E has been a sales success, back-ordered for most of its three-model-year existence.
Almost $6,000 Off Some Models
Ford’s move today cut prices by as little as $900 and as much as $5,900 on the Mach-E.
| Model | Old Price | New Price | Difference |
| Select RWD Standard Range | $46,895 | $45,995 | $900 |
| Select eAWD Standard Range | $49,595 | $48,995 | $600 |
| California Route 1 eAWD Extended Range | $63,595 | $57,995 | $5,580 |
| Premium RWD Standard Range | $54,995 | $50,995 | $3,980 |
| Premium eAWD Standard Range | $57,665 | $53,995 | $3,680 |
| GT Extended Range | $69,895 | $63,995 | $5,900 |
| Extended Range Battery Option | $8,600 | $7,000 | $1,600 |
Why The Cuts? Maybe Because the IRS Declared it a Sedan
The cuts are partly a way to stay competitive with Tesla’s Model Y, America’s best-selling EV.
But they’re likely also a response to an IRS decision.
New rules took effect in January governing the $7,500 tax incentive the federal government offers toward the purchase of some EVs.
The rules limited the incentive to cars built in North America. That works for Ford, as the Mustang Mach-E is assembled in Mexico.
But they also enacted price caps in an attempt to drive down the prices of electric cars. To be eligible for the rebate, a sedan must be priced at $55,000 or below; an SUV, at $80,000 or below.
That left the IRS the task of deciding what, exactly, qualifies as an SUV. The agency solved its problem by relying on old Department of Transportation metrics that relied on a series of measurements – weights and angles – to decide whether a vehicle is designed for off-road use.
Several vehicles that automakers market as SUVs fell short of the measurements. That list includes the Model Y and the Mach-E. Their builders may sell them as SUVs, but in the eyes of the IRS, they’re just tall sedans.
Ford’s move gets several popular Mach-E models under the $55,000 limit. While Ford is now charging $3,680 less for a Mach-E Premium eAWD Standard Range, for instance, many buyers will end up paying $11,180 less than they would have last week, thanks to the tax rebate.
Move Worked for Tesla But Angered Some Owners
Tesla’s move reportedly caused an immediate spike in demand for many of its cars. Tesla is a notoriously opaque company – it’s hard to get sales figures out of them before their quarterly reports. But anecdotal reports suggest the company may be headed for a stronger-than-usual sales quarter thanks, in part, to the price breaks.
However, some owners who’d already bought Teslas vented their anger at the company for cutting prices dramatically and doing nothing to compensate those who’d paid the older, higher price.
Ford may be hoping for a similar sales spike. The company says it “is significantly increasing production of the Mustang Mach-E this year to help reduce customer wait times.”
