What happened

Tesla's (TSLA 0.66%) announcement of price cuts earlier this month continues to reverberate across the EV industry as shares of rival electric car manufacturers see their share prices tumble this morning. Through 10 a.m. ET, shares of Chinese electric automakers Nio (NIO -0.36%) and Xpeng (XPEV -3.62%) are down 3.1% and 4.9%, respectively. Closer to home, luxury EV-company Lucid Group (LCID 0.18%) is losing 3.8%.

But this time, it's not Tesla's price cuts that are worrying investors. It's Ford's (F -0.48%).

So what

Bright and early this morning, Ford updated pricing on all seven models of its 2023 Mustang Mach-E electric car, cutting the price by anywhere from $600 to $5,900 depending on the model purchased -- or by 1.2% to 8.4%.  

Ford's cuts aren't nearly as steep as the astounding up-to-20% round of price-slashing that happened at Tesla two weeks ago. (And that should perhaps worry investors. It may mean that Ford cannot afford to cut prices as steeply and have any hope of earning a profit). Also curious is the point at which Ford stopped cutting prices.

A couple of examples: Up until yesterday, a base model "Select RWD Standard Range" Ford Mustang Mach-E cost $46,895 -- already well within the $55,000 limit that the IRS has set to qualify the car for a $7,500 tax rebate (if all other conditions are met). Ford cut the price by only $900 today, which doesn't really give buyers any tax benefit -- and only a minimal sticker price savings.  

And consider the "GT Extended Range" Mach-E, recipient of Ford's biggest price cut from $69,895 to $63,995. That's $5,900 more in a car buyer's pocket, true -- not an insignificant sum. But it's still not a big enough cut to win a tax credit from the IRS so ... what's the point, really? It's not going to help Mach-E sell out Tesla's Model Y. At least, not with a Model Ys flying off the shelves at a starting price of $53,490!  

Now what

I think the takeaway for Tesla investors today is that Ford's price cuts indicate the real weakness of Ford's position relative to Tesla in an expanding EV price war. The tiny cuts Ford has announced aren't going to move the market share needle much for Ford at all vis-à-vis Tesla.

What Ford's pricing move today might do, however, is make the Mach-E more price-competitive with the Lucid Air, which at a starting price of $87,400 is still miles away from qualifying for any sort of IRS credit. This is bad news for Lucid.

As for Nio and Xpeng, well, the price cuts may make Ford's EV more competitive in China -- albeit Ford is only believed to be selling a few thousand Mach-Es per year over there.  With Xpeng already cutting prices to compete with Tesla, and Nio likely to follow suit, I see little prospect for this price cut helping out Ford much in China, either.  

But as one of the first shots in a price war, it could still hurt everybody else.