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Ford Mustang Mach-E rebate: Here’s how it might work

Ford’s (F) move to cut prices of its Mustang Mach-E to compete better with Tesla’s Model Y price cuts wasn’t a big surprise.

However, Ford’s move differs from Tesla’s in one key way: Money back for certain consumers.

In Ford’s announcement of the price cuts, Ford revealed very important clarifications for new and upcoming Mach-E customers: "Existing Mustang Mach-E customers awaiting delivery of their vehicle will automatically receive the adjusted price and for customers with a sale date after Jan. 1, 2023, and already have their Mustang Mach-E, Ford will reach out directly."

Ford intends to do something for new Mustang Mach-E owners who took delivery this year, but before the price cuts were announced.

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Ford did not immediately respond for comment when Yahoo Finance reached out for clarification. But for sure, Ford's announcement is a complete 180-degree from Tesla’s approach, in which owners who took delivery prior to its price cuts were out of luck.

A picture shows the Ford Mustang Mach-E car at Ford's Halewood plant in Liverpool, north west England, on October 18, 2021. - US auto giant Ford on October 18 unveiled plans to convert a UK factory into its first electric vehicle component assembly site in Europe. Ford will invest £230 million ($316 million, 273 million euros) in its Halewood plant on Merseyside in northwest England, the carmaker said. (Photo by Paul ELLIS / AFP) (Photo by PAUL ELLIS/AFP via Getty Images)

Experts told Yahoo Finance that rebates for retroactive payments for new owners is novel in the auto industry.

“It’s not very common, and we also noted that feature in our analysis to clients. We’re labeling it ‘proactive pragmatism’ on Ford’s part,” Tyson Jominy, J.D. Power VP of data and analytics, told Yahoo Finance. “As you may have seen, Mr. Musk scoffed on Twitter at the suggestion that recent purchasers be made whole for the difference. I can’t help but see this as [a] jab at Tesla’s pricing practices, which were a surprise and fright for many.”

Jominy noted that 70% of Mustang Mach-E owners are "conquest," or new owners coming from a different brand, and Ford does not want to alienate these new buyers. “A rebate as a surprise and delight is one way to do that,” he said.

Edmunds consumer insights analyst Joseph Yoon agreed that rebates in any form aren't the norm.

"Retroactive price adjustments aren’t common at all,” Yoon said to Yahoo Finance. Yoon noted that the easiest way for Ford to please customers awaiting delivery would be to cut a check once the vehicle arrives, though if that isn’t a possibility, EV charging credits could be an “enticing alternative.”

But it seems in this case Ford is going beyond that, possibly offering cash or EV charging credits for those owners who already have taken possession of the car in 2023.

“I expect this to be a check sent to consumers for the full amount of the price cut. If all the cuts were akin to the Select trim cuts in the 1-2% range perhaps they could have done something like free charging, but when changing prices up to $5,900 it’s a bit harder to envision anything other than a straight payment to consumers,” Jominy said.

New Ford Mustang Mach-E pricing
New Ford Mustang Mach-E pricing (Ford)

However, the implications for a rebate could be huge, even beyond the amount of a retroactive price cut. And this is due to the IRA tax credit, which kicks in a $7,500 reduction if the cost of the EV is below $55,000.

“Our analysis shows that the Premium eAWD trim, the top selling trim, is the only one that this change moves to in-the-money from out,” Jominy says, noting that its MSRP fell from $57,675, to $53,995 after the price cut.

This means that owners who purchased the Mach-E in Premium eAWD trim may not only get a $3,680 rebate but also qualify for the $7,500 tax credit. The combination of these two could provide owners with a $11,180 price cut in total.

Jominy said that his analysis of the price cuts would make 69% of Mach-E buyers in January eligible for the tax credit, up from 41%. And it provides more “breathing room” for other Mach-E buyers, who may have “optioned up” a lower trim level above the tax credit threshold, to now enjoy the benefits of the tax credit if you include the retroactive price cut.

In the press release for the Mach-E price cuts, Ford said it wasn’t going to “cede ground to anyone.” Reading between the lines, Ford is talking about one competitor in particular, Tesla.

With the possibility of offering retroactive price cuts — and tax credit bonus to boot — Ford may have one-upped Tesla in its burgeoning EV price cut war.

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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