Ford CEO Jim Farley says Tesla price cuts could start an EV price war
- Ford CEO Jim Farley says Tesla's pricing could spark an EV price war.
- Farley said Tesla's attempt to increase sales was "completely rational and should surprise no one."
Ford CEO Jim Farley said Tesla's price cuts could spark an electric-vehicle price war and transform some into commodities.
At a charity event in Detroit reported on by Bloomberg, Farley said Tesla's attempts to increase sales were "completely rational and should surprise no one."
Elon Musk's company has slashed the price of its cars six times this year, making the EVs more affordable than they have been for years. The cheapest model, Tesla's entry-level Model 3 sedan, now costs less than $40,000.
In January, Ford followed Tesla in cutting EV prices, discounting its plug-in Mustang Mach-E range by between about 1% and 8.8%.
"Price wars are breaking out everywhere," Farley said. Who's going to blink for growth?"
Tesla's price cuts are aimed at undercutting rivals and boosting market share, but the strategy has cost the company.
On Wednesday, the automaker logged revenue of $23.33 billion, which was roughly in line with estimates, according to Refinitiv. But its profits took a hit as net income plummeted 24% year-on-year to $2.51 billion during the three months ending March 31.
Seth Goldstein, an equities strategist for Morningstar, told Insider Tesla's price cuts had left legacy automakers scrambling. He said Ford, which previously predicted its EV business would keep losing money until at least 2026, was faced with the "potential of having to cut prices or hurt profits even more."
"That makes for an interesting scenario in terms of how they respond," Goldstein said.
Farley said at the Detroit event that Ford would focus on areas where there was less competition, such as pickup trucks and vans, Reuters reported.
Representatives for Tesla and Ford did not immediately respond to Insider's request for comment, made outside normal working hours.