Ford Motor announced on Wednesday that the current Mustang Mach-E electric vehicles on dealership floors may not qualify for federal tax credits from January onwards. The U.S. Treasury’s recent guidance introduced battery sourcing restrictions effective January 1, aiming to reduce dependency on China in the U.S. EV supply chain. The existing Mach-E model currently benefits from a USD 3,750 federal tax credit.
Impact on Mach-E and F-150 Lightning EV
Ford is evaluating whether its F-150 Lightning EV truck will continue to qualify for tax credits post-January. The company has not disclosed specific reasons for anticipating the Mach-E to lose its tax credit eligibility. Ford, the second-largest U.S. automaker, has experienced growing demand for the Mach-E, with 35,908 units sold in the U.S. during the first 11 months of this year, marking a 3.5% increase from the previous year.
Production challenges and investment delays
In October, Ford made significant announcements regarding its EV strategy. The company disclosed a delay in approximately USD 12 billion worth of EV investments, including the postponement of its second battery plant in Kentucky. Simultaneously, Ford revealed a temporary reduction in production at the Michigan facility manufacturing the F-150 Lightning, citing various challenges, including supply chain disruptions.
Dealer guidance and incentives
Ford has communicated the potential expiration of tax credits to its dealers, encouraging them to motivate customers to make purchases before the year-end deadline. Dealers were informed that incentives for the 2023 model Mach-E and F-150 Lightning sales and leases would be extended. This move aligns with Ford’s strategy to boost sales and maintain customer interest amid changing tax credit scenarios.
Industry response
General Motors (GM) anticipates that many of its electric vehicles will qualify for U.S. tax credits in 2023, considering the new regulations on Chinese battery content. Similarly, Volkswagen expressed cautious optimism that its 2024 model year ID.4, assembled in Chattanooga, might qualify for the full USD 7,500 Tax Credit.
In December 2021, Ford had outlined plans to triple the production output of its all-electric Mustang Mach-E to exceed 200,000 units annually by 2023, catering to North America and Europe. The recent uncertainty surrounding tax credits adds a layer of complexity to Ford’s EV strategy, especially with the potential impact on consumer purchasing decisions and overall market dynamics.