Ford’s stock price recently sank after the motor company announced it is pausing production and shipments of its flagship electric F-150 Lightning. The company stated the disruption is due to potential battery issues with the electric vehicle.
This is not good for Ford’s performance in the electric vehicle market as competition among car manufacturers has become cutthroat. Apparently, the Ford caught the alleged battery issue in its pre-delivery quality inspection. Inside EV’s reported:
The publication writes that Ford spokesperson Emma Bergg has officially confirmed the information. It’s also known and confirmed that the pause comes as a precaution due to a potential battery issue, though the specifics of the concern have yet to be made public.
Bergg did, however, disclose that Ford became aware of the potential issue during a pre-delivery quality inspection. At this point in time, the carmaker hasn’t been apprised of any real-world incidents or problems related to the possible battery concern.
Ford spokeswoman Emma Bergg said, “The team is diligently working on the root cause analysis,” also adding the company is “doing the right thing by our customers” before production and shipments resume. She noted that “It depends on how long it will take to conduct the root cause analysis” before operations resume with the electric truck. Reassuringly, the spokeswoman said “We are not aware of any incidences of this issue in the field,” indicating no customers who are actively driving the Lightning have reported the issue they discovered.
Ford shares were down 1% in Tuesday afternoon trade. Conversely, Tesla has seen its stock price surge since the beginning of the year in light of profitability and high demand for its lineup of electric vehicles. Tesla has been able to “weaponize” price cuts against traditional automobile manufacturers, such as Ford, who have razor thing margins on their EV lineups. Zero Hedge reported:
Tesla’s move to squeeze competitors by sacrificing some of its strong operating-profit margins is a desperate attempt to increase sales but also roiled the secondary market for used Teslas.
Meanwhile, dealers who sell Teslas from their used-car inventory say valuations on some models fell by several thousand dollars following this month’s price cut. In the first 17 days of January, prices of 2020 model year or newer used Teslas were down about 25% from their peak in June of last year, about double the rate of the industrywide drop during that same period, according to Edmunds. –WSJ
One example of the price cut was the Model Y, now priced at $53,000, down from about $66,000. And if buyers qualify for the federal tax credit, they can loop off another $7,500.
In typical nature of free market competition, Ford elected to cut prices on the electric Mustang Mach-E along with other models to compete with Tesla. Ford shareholders were not pleased with this move given the thin profit margins on its EV’s and Ford shares dipped.
Moreover, Ford has been dealing with operational “execution issues” where the company fell short of expected sales by nearly 100,000 units. Fourth quarter reporting for Ford was “ugly” as it missed Wall Street’s expectations.
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