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Ford (F) reported that U.S. auto sales rose 4.3% in January despite a decline in EV sales. Ford’s EV sales have fallen sharply, with sales of the Mustang Mach-E down 50% from the previous year. The decline comes after the Mach-E loses eligibility for federal tax credits in 2024, making it more expensive for buyers.
Yahoo Finance’s Pras Subramanian explains the details.
For more expert insights and the latest market trends, click here to watch the full episode of Yahoo Finance Live.
Editor’s note: This article was written by angel smith
video transcript
[AUDIO LOGO]
Julie Hyman: Ford reported a strong start to the year, with U.S. sales surging in January. On the other hand, the sales situation for the company’s electric vehicles is bleak. Yahoo Finance’s Pras Subramanian explains more. Plus, I don’t think it’s surprising on the electric car side. I feel like that was a difficult place for everyone.
Pras Subramanian: Well, I think the general trend is that sales are growing, but not as fast as expected. However, in this case, this was a big surprise as Ford’s monthly sales increased 4.3% year-on-year to approximately 152,000 units, 100,000 units more than Toyota. However, EV sales are down 10.9%, which is a little surprising. Usually they’re probably something like a flat line or a few percent increase, right? That is, it decreased by 10.9%. This is largely due to Ford’s Mustang and Mach-E, which lost tax credit eligibility earlier this year. Sales have decreased by 50%, so basically this is all the change.
Lightning was pretty much the same as last year. This means that winter travel anxiety is widespread, likely due to high costs. People are more worried about it in winter. Maybe this is a high rate. These things influence the Mach-E. And the Mach-E is also 3 years old, so it’s not a new vehicle. From that perspective, there’s a lot more new competition that Ford is dealing with.
Julie Hyman: So this is very interesting to me. Because if people don’t buy that car because the tax credit is gone, are they buying something else, or are they buying another EV? Are they still driving what they were driving and haven’t made any upgrades? Perhaps they are waiting for another tax credit to go into effect?
Pras Subramanian: Probably, at least at Ford, we’ve seen hybrid sales increase by more than 40%. The Ford Maverick, a compact hybrid pickup, is doing very well and is driving much of the company’s sales. So there might be some substitution effect going on there with two different models. But perhaps it’s just that the right product just doesn’t exist in the world yet.
Julie Hyman: Hybrid sales are also a trend seen by other automakers.
Pras Subramanian: Yeah, sure, sure.
Julie Hyman: Yes, it’s interesting. Thank you, Plus. appreciate.
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