As long as the Mustang Mach-E maintains core aspects of the Mustang brand, it should be fine. Porsche, Lamborghini, and Jeep all have used a brand name on a vehicle type that was unthinkable for it, as well. Remember when Porsche fans were all up-in-arms by the Cayenne SUV? But since Porsche still makes sports cars like the 911, Porsche can call the Cayenne "The Porsche of SUVs".
The Mach-E retains the performance aspects of the Mustang brand, and the idea is that name recognition of the Mustang brand will draw people in. With that being said, we will still have to see if this will be a success or a flop.
Nonetheless, it's a good thing for the automotive industry in general.
Here's an interesting read.