Ford followed Tesla’s price cuts with its own on the F-150 Lightning and the stock market didn’t react well. That reaction might sound logical based on recent comments from CEO Jim Farley but could also be incorrect. Ford is ramping up production on its signature EV pickup and expects to see sales and deliveries balloon too.
July 17 marked a special day for Ford customers and a rough day for investors. Farley announced that pricing across the Lightning lineup was falling. Almost immediately, Ford’s stock price dropped to the tune of $3.6 billion in total value.
That likely comes, in part at least, as a product of the fact that Farley said earlier this year that Ford would focus on vehicles with “serious pricing power” in an effort to avoid the need to compete on price. Dropping prices on an incredibly in-demand product like the F-150 Lightning seems like a step backward from that position. Analysts say that it could end up working out great for the Blue Oval brand though.
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“Everyone loved it when Tesla did it,” said David Whiston, an auto analyst at Morningstar to Automotive News. “As long as they’re truly making improvements in production costs and input costs, then giving some of that back to the consumer makes sense.” If Ford can prove that price cuts lead to more market share, the stock price could easily jump as far or further than it dropped in this case.
Part of why Tesla has seen its stock more than double this year is that it’s bet that lower prices would increase demand paid off. It’s successfully leveraged its positions as a leader and now Ford needs to follow suit as a leader in the EV pickup truck market.
Farley said during the pricing announcement that it still plans on making 150,000 F-150 Lighting units this year. Once the production facility in Michigan is fully up to speed it could build up to half a million trucks a year, provided that the demand still exists for that much Lightning in the world.
