Ford Motor Co. F on Monday said it is cutting prices of its F-150 Lightning pickup truck by up to $9,979 and investors reacted to the news by sending the stock lower.
Deepwater Asset Management analyst Gene Munster sees this as a reactionary move.
What Happened: The 17% price cut announced by Ford showed the legacy automaker is worried about Tesla, Inc.'s TSLA Cybertruck. He noted that the models of both companies will have a starting price of about $50,000, he said.
Dearborn said one of the reasons for the price cuts was the decline in the cost of metals, including lithium, and it was passing on the savings to buyers, Munster noted. "That is hard for me to believe, given Ford is still losing more than $25,000 on each truck."
Munster does not expect Ford's pricing action to hurt Cybertruck sales as the waiting list for the Tesla vehicle is too long, likely close to 1.5 million. Of these 500,000 are real buyers, he said.
The fund manager, however, sees Ford's price cut as a negative for Tesla eventually, as it will mean more competition long term.
See Also: Best Electric Vehicle Stocks
Why It's Important: Ford's price cuts were timed perfectly as Tesla just announced that the first Cybertruck rolled off the production line. The long-awaited vehicle from the company's stable could begin deliveries later this quarter.
Ford's F-150 Lightning, the electrified version of its best-selling F-150 pickup truck, has been in the market for over a year now. The vehicle has not found much traction, and earlier this year, the company stalled production following a battery fire hazard in February.
The company sold 4,466 F-150 Lightning pickup trucks in the second quarter, up merely 4.1% from the previous quarter.
Ford closed Monday's session 5.94% lower at $14.09, while Tesla rallied 3.20% to $290.38, according to Benzinga Pro data.
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