Australia’s two best-selling electric cars have had their prices cut by thousands of dollars in a surprise move by Tesla to counter growing competition in battery-powered vehicles.
The US firm, which suffered a 65 per cent stock market slump in 2022, trimmed as much as $3400 from the cost of its Model Y and $3100 from the cost of its Model 3 electric vehicles in Australia on Friday.
The automaker also cut the cost of its vehicles in Japan and South Korea, and in China even though the company had reduced prices in the country just three months earlier.
But Tesla’s move was welcomed by analysts who said cuts were needed to counter rising competition in the electric vehicle market, particularly from a new generation of Chinese auto brands.
Vehicles from Chinese owned brands BYD and MG ranked among the top five electric vehicles in Australia last year, and both companies have committed to launching new models in Australia in 2023.
Gerber Kawasaki Wealth and Investment Management co-founder Ross Gerber said Tesla’s price cut would help the company “compete against the many cheap Chinese EVs” threatening its market lead.
“Smart move as costs are declining now and COVID has seriously dented the Chinese economy short-term,” he said.
The move will also further reduce the price of buying an electric vehicle in Australia after the federal government cut fringe benefits tax on some electric vehicles in November, saving individual buyers as much as $4300.
Tesla’s new cuts will see the cost of an entry-level Model 3 fall to $63,900 – cheaper than its 2019 launch price – and bring base Model Y back to its original launch price of $68,900.
The price reduction will also be passed on to Australian buyers who had already ordered one of the Tesla vehicles but had yet to receive it.
Figures from the Federal Chamber of Automotive Industries this week showed Australian sales of electric vehicles nearly doubled in 2022, reaching 33,410 cars compared to 17,243 in 2021.
But electric vehicles made up only 3.1 per cent of all new car sales, out of more than one million sold during the year.
