While Germany struggles with EV price increases and the impact on the country’s transportation emission reduction goals, here in the US, the news is better. Financial Times reported this week that Ford announced a price cut on its new Lightning pickup in response to Tesla’s price cuts announced earlier:
“Market leader Tesla sparked a price war when in January it slashed prices for its own vehicles by up to $13,000. Ford responded by cutting prices for its flagship electric SUV, the Mustang Mach-E, only to have Tesla then discount its Model S and Model X vehicles in March. The companies’ price cuts have, however, contributed to rising sales for both carmakers.”
Rising sales is obviously good news for automakers. It is also good news for the government: transportation emissions reduction goals may be more achievable and subsidies/tax breaks less critical to buyers. Also, if EV uptake in the US rises, that would likely bode well for some corporate climate goals/targets related to transportation emissions.
But part of this story could be a cautionary tale for some companies’ business assumptions: sustainable or “green” products may no longer justify premium pricing. One could argue they never really did – in my opinion, the concept generally proved unsuccessful in the 1990s. Yet I’m hearing about companies building business models on green premium pricing even today. We’ll have to see how that goes.