Since the $7,500 EV incentives in the Inflation Reduction Act last August, Ford hiked the Lightning price by $16,000.
By Wolf Richter for WOLF STREET.
I warned about this over a year ago, when the prior version of EV incentives were being pushed in Congress: You do not subsidize a product that is already in red-hot demand with short supply or no supply, with huge waiting lists and long-sold-out production runs. You’re not making this product cheaper for consumers, you’re just making it more expensive because automakers will instantly hike prices to swallow all of those incentives plus some, and that’s exactly what is now happening, and it’s going to stimulate inflationary pressures further and cause more headaches for the Fed and the economy.
Ford, which builds one of the two EV pickups on the US market, announced its third price increase of its electric F-150 Lightning, bringing the total price increase since its introduction to $16,000 or 40%. Inflation here we come, thank you, Congress.
Ford raised the price of the base version of the F-150 Lightning by another $4,000, or by another 8% to “starting at” $55,974. Plus destination and delivery charges.
Back in May 2021, before Congress passed the EV incentives, Ford originally priced the base version of the Lightning at $39,974. Plus destination and delivery charges.
Then comes Congress with the Profit Enlargement Act.
In August 2022 – just as Congress was passing the “Inflation Reduction Act” that included all kinds of incentives to fuel even more inflation and enrich Corporate America, including the $7,500 subsidy for EVs – Ford hiked the price of the Lightning by $7,000, to $46,974, eating up in one gulp nearly all of the EV subsidy. So inflation just got worse LOL.
Then a couple of months later, in early October 2022, Ford hiked the price of the Lightning by another $5,000, to $51,974, laughing out even louder about the EV subsidies,
Then a couple of month later, meaning now, Ford hiked by another $4,000 to $55,974. Plus destination and delivery charges of $1,895, for a total MSRP of $57,869. For the cheapest version.
Throughout the price-hike period, the destination and delivery charges were also hiked by about $200.
Ford also jacked up the prices of its Mustang Mach E SUV in August 2022, as the $7,500 in incentives were being passed, by $3,000 to $8,000, depending on trim.
Tesla increased its US prices by $2,000 to $6000 in June 2022
I’ve been screaming about EV incentives for a while.
Prices go up because they can go up. If competition and a buyers’ strike by consumers don’t allow prices to go up, then prices don’t go up, and if automakers try to raise prices anyway, then sales plunge, and suddenly there’s oversupply, all the way up the supply chain, which brings costs down too. That’s how inflation ends.
But that’s not the situation today. Today there is red hot inflation, red-hot demand for EVs, already grotesquely overstimulated consumers, who’re now getting another $7,500 from the federal government and more from state governments to buy EVs, and crank up already hot demand for EVs amid a lack of competition and very limited supply.
When there is strong demand, lots of incentives to heat up demand further, amid limited or no competition, limited supply, and the now blooming inflationary mindset where enough consumers just pay whatever, well then manufacturers just charge whatever.
If you want to incentivize a nascent technology to get it going, OK. But EVs are the hottest product out there now, with huge demand, a huge amount of excitement, long waiting lists, sold out production runs, and very little supply.
In September 2021 when a prior version of the EV incentives was kicked around in Congress, I said:
“Piling on government incentives via tax credits on an already red-hot industry that is already planning to invest hundreds of billions of dollars to compete and bring EV prices down, amid red-hot demand from overstimulated consumers chasing down new vehicles no matter what the price, amid red-hot inflation and historic inventory shortages” is a “totally braindead economic policy.”
It’s not braindead if you’re on Corporate America’s payroll because this bill, like many other bills going back eons, is turning into a fabulous Corporate-America-enrichment bill, as these price increases show.
Competition will bring prices down, not incentives. And lower prices stimulate demand. Incentives are fueling price increases and profit margins. Hot inflation? High interest rates? Don’t worry, To douse inflation, Congress is throwing more fuel on it, LOL.
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