Ford Motor Co announced a significant price reduction for its Mustang Mach-E electric SUV, slashing prices by up to $8,100 in response to a notable decline in sales in January. The adjustments aim to make the Mustang Mach-E more competitive in the market and align with consumer expectations.

The entry-level 2023 model year of the Mustang Mach-E will now be available at a suggested retail price of $39,895, marking a decrease from the previous $42,995. Similarly, the higher-end Mach-E GT variant will see a price reduction of approximately $7,600, bringing its price down to $52,395. Additionally, other versions, including the extended-range premium model, will experience an $8,100 price drop, now priced at $48,895.

Ford emphasized that these price adjustments are part of their strategy to adapt to market conditions and optimize the balance between sales growth and customer value. The decision comes in the wake of a significant decline in Mach-E sales, which fell by 51% in January to 1,295 units.

One contributing factor to the sales decline is the loss of eligibility for a $3,750 tax credit starting January 1. This loss of tax credit stems from new battery sourcing requirements implemented by the U.S. Treasury Department, aimed at diversifying the electric vehicle supply chain away from reliance on China. Consequently, numerous other models also lost tax credits.

In comparison to its competitor, Tesla’s Model Y crossover, which starts at $42,990 before federal tax credits of $7,500, Ford’s price adjustments reflect an effort to remain competitive in the market.

The move also highlights the ongoing price war initiated by Tesla last year to stimulate demand and capture more market share. While Ford and other traditional automakers have temporarily slowed their electric vehicle initiatives to focus on higher-margin hybrid and gas-powered models, Ford’s price reduction strategy underscores its commitment to maintaining a strong position in the evolving electric vehicle landscape. This includes adjusting production schedules, as evidenced by Ford’s decision to reduce production of its F-150 Lightning pickup truck starting April 1, shifting its Michigan Rouge Electric Vehicle Center to operate on only one shift.