Ford EVs Will Shoot Up In Price As Tax Credits Dry Up

Industry News / 9 Comments

What impact will this have on the cost of new electrified cars?

One of the big motivators in getting Americans to consider the idea of an electric vehicle was the incentive of an EV tax credit that could be passed on from the manufacturer to the customer. These credits apply to both pure electric vehicles and plug-in hybrids with a total battery capacity of at least 16 kilowatt-hours. For fledgling automakers like Rivian, this incentive is a great way to offer a premium product with a significant discount, but for companies that have been producing electrified vehicles for a long time, this advantage is now waning. In fact, data from the Internal Revenue Service suggests that Ford will run out of tax credits sooner than predicted, possibly within a few months.

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According to the data shared by the IRS, Ford sold 3,387 qualifying vehicles in 2012. By the following year, the cumulative number had grown to a total of 18,169 vehicles, thanks to the introduction of the Focus Electric. The 2010s also saw the arrival of vehicles like the C-Max Energi and Fusion Energi, and in 2017, Ford had sold a total of 103,231 vehicles that qualified for the credit. That number grew at a rate of fewer than 10,000 vehicles per year, with 126,641 total vehicle sales reported in 2020. But by 2021, that number jumped to 159,588 with the arrival of the Mustang Mach-E, a jump of almost 33,000 vehicles.

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Ford does not break down its sales by vehicle type or model in all cases, but estimates put Ford's pure EV sales for 2022 so far at over 22,000, excluding hybrids like the F-150, Maverick, Escape, and Explorer. This means that Ford is already well past 180,000 sales of qualifying electrified vehicles, if not close to 190,000. With the ceiling at 200,000 units, it seems that Ford is about to be forced to withdraw an incentive. What makes matters worse is that the Blue Oval is losing money on every Mustang Mach-E it sells. Supply chain issues continue to challenge all automakers too.

Will Ford raise prices? Will it absorb the costs and continue to pass incentives on to buyers so that it can become more attractive and lure buyers away from alternative brands? We'd bet on the former.

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