3 May 2024

Australia is headed for slowing EV demand too, we're just a bit later to the party

| James Coleman
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Tesla Canberra

The Tesla Canberra store on Bunda Street. Photo: James Coleman.

Canberra’s best-selling EVs are now $3000 less to buy brand-new than they were last week.

It comes after Tesla reported its worst quarter since 2021 – a 9 per cent drop in revenue from January to March.

Global vehicle deliveries also fell over the same period for the first time in four years, and founder Elon Musk has flagged plans to lay off more than 10 per cent of the global workforce as he braces for the first annual drop in deliveries.

Shares have taken a tumble, too – they’re down 40.8 per cent since the beginning of 2024.

READ ALSO New EV charger added to summer’s busiest highway

What does this mean?

The result is price cuts across the Tesla range. The US was first, followed by the other major markets like China and Germany, and as of 23 April, Australia too.

The Model 3 sedan is down $3000 and now retails from $58,900 – the cheapest it’s been since July 2023 when the previous model fetched $57,400.

It’s the second change in less than a month for the Long Range AWD version as well, which was only just cut from $71,900 to $70,900 on 4 April.

The original Model 3 launched in Australia in July 2019, costing $66,000 for the RWD and $87,842 for the AWD.

The Model Y SUV has also dropped by $3000 and retails from $60,900. This makes it $8000 cheaper than 12 months ago and $11,400 less than 18 months ago.

Orders opened for the Model Y in June 2022, when it cost $68,900.

What’s causing it?

Demand for Teslas has waned in the US and EU as a flood of Chinese models heats up the competition, chiefly from BYD and MG. These markets are also moving past the early-adopter phase when most people who can afford an EV already have one.

Musk tweeted late last month that “Tesla prices must change frequently in order to match production with demand”.

But Australia hasn’t been hit by this same shift yet.

white Tesla on a beach

Tesla sold 1041 Model Ys in the ACT last year. Photo: Tesla Australia.

Between January and March this year, 46.4 per cent more EVs were registered across the country than in the first quarter of 2023.

Tesla enjoyed a 23 per cent uptick in deliveries over the same period, and the Model Y and Model 3 took up 12,789 sales – or just over half the number of all new battery-powered vehicle sales in Australia.

Third place went to the BYD Atto 3 (2220 sales), followed by its sedan sibling, the BYD Seal (1573). The MG4, appropriately perhaps, took fourth place (1335).

Closer to home, Tesla sold nearly 2000 new cars in Canberra last year – 1041 Model Ys and 761 Model 3s – making it our second favourite brand after Toyota. This figure compares to a total of 725 cars in 2022.

READ ALSO Major rule change for EVs should have come sooner, Canberra’s vision-impaired say

The Australian Automotive Dealer Association (AADA), based in Barton, says this is because Australia was “a bit later” to the EV party.

“Unlike other countries, we have only recently started incentivising and encouraging EV uptake,” CEO James Voortman says.

“I think Australia is still in the ‘early adopter’ phase of EV uptake, which explains the current higher rate of growth relative to markets like the EU.”

What does it mean for used EVs?

As for what happens next, it’s tricky.

“Significant price reductions by manufacturers like Tesla are a major factor driving depreciation of EVs,” Mr Voortman says.

“New car price cuts directly affect used car values.”

This depreciation may mean more people are able to afford used Teslas, but it could also put people off.

How does depreciation for EVs compare to other cars?

EVs lose value much faster than petrol, diesel or hybrid cars.

Data from a December 2023 AutoGrab report shows EVs up to two years old retain 82.8 per cent of their value, compared with 95.5 per cent of all other vehicle types. EVs only keep 57.6 per cent of their value between two and four years and 24.1 between five and seven years.

Other vehicle types retain 85.9 and 68.8 per cent of their value over the same respective time periods.

fast charging station at Casey Market Town

Fear over battery health is the greatest put-off for buyers of second-hand EVs. Photo: ACT Government.

Will this improve?

Mr Voortman says concern over battery life is the biggest reason for the gap in value.

“The older the battery, the closer it will be to losing its manufacturer warranty and the greater the consumer’s fear that they could be stuck with a battery that does not hold its charge or, worse, requires replacement.”

However, most car manufacturers guarantee their batteries for longer periods than the standard car warranty.

Tesla, for instance, covers the battery in the Model 3 RWD for eight years or 160,000 km, whichever comes first, with a minimum 70 per cent battery capacity retention over the warranty period. Cover for the Long Range and Performance models is eight years or 192,000 km.

Mr Voortman expects residuals for EVs to improve as the “technology gets better and consumer education improves”.

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A Nonny Mouse6:26 pm 09 May 24

EVs are currently declining in resale value but that is of little consequence to someone who buys an EV and only sells it on after 15 years. The decline in resale value is only because new EVs are getting cheaper. At some point this will hit ICE resale value too. Who would pay (say) $30K for an ICE car that cost $50K a few years earlier when they could get a better used electric car for $15K or a new one for $25K?
Ultimately, all this analysis is irrelevant. It is not possible to decarbonise transport using ICE vehicles, hybrid or not, so we have to stop making and selling them.

EVs are a nice idea because electric motors are better than ICE from a performance and maintenance point of view; but the weakness is the current battery technology. I understand the wishful thinking especially by net-zeroists, but looks like ordinary people (people who aren’t fleet buyers, idealists or wealthy early tech adopters) are voting with their feet. Also, while waiting for better battery tech, hydrogen may still surprise. Might as well keep the ICE for now, see what happens, eh?

No way would I consider one. Range problems, fire disaster areas, expense, charging difficulties, resale hopeless…and this is for what – so we can signal to the rest of the world we can control the climate?

Have you tried getting a quote to insure one yet?!

Ouch, the mid-range model dropped by nearly $20k from when it was released. No wonder you can’t give these things away after the first three years. What happened to the more expensive performance models?

There are clearly huge issues involved that are yet to have a solution around these cars (insurance costs, parts, qualified mechanics, resale value, charge times, extinguishing fires)

Personally my biggest issue with them is physics. Oh well, I hope the people who bought them like them as they are going to take an absolute hosing if they try to sell them.

Capital Retro2:23 pm 06 May 24

Virtue signaling costs.

It just shows how much the “early adopters” were being rorted (or should that be ‘fleeced’?!)

Early adopters in any endeavour always pay a premium for ‘being first’ … it’s a reality until economies of scale kick in. I doubt any of the EV early adopters got into it for the investment value – but you obviously know something different.

And what price a new battery for an EV compared to a new battery for a ICE vehicle ? And I was listening to an interesting interview on the radio (yes – radio), about the difficulties in getting work done on EVs because there are insufficient mechanics qualified to do to. Which according to the interview was resulting in a lot of EVs being written off by insurance companies – because finding and paying for a qualified mechanic to repair the EV was more expensive than writing it off. A lot of the positive coverage on on EVs seems to overlook a number of these issues.

It says at the top “Completed”.

If you have questions, try asking the people involved.

Your rhetorical flourishes suffer terrible droop.

Capital Retro11:40 am 06 May 24

It also says “returning soon” and that was three years ago.

So, ask them. You could also ask yourself, “Relevance?”

Why are you so dependent on others to spoon-feed knowledge to you? Seriously.

Capital Retro2:25 pm 06 May 24

Well, someone said I am only 3 years old so I have to be spoon fed.

Hogman Harold9:54 am 05 May 24

There is another cost, not covered in this report and that is insurance. Insurance cost of owning an EV are much higher than an ICE vehicle. Until the technology around recycling becomes much better its a no from my family

The high insurance costs are also influenced by the catastrophic nature of EV battery fires and the fact that (globally) fire services have yet to effectively master the control of such fires.

A Nonny Mouse6:18 pm 09 May 24

My electric car costs about the same to insure with NRMA as our previous fossil cars did.

Stephen Saunders9:36 am 05 May 24

Tesla Virtue is part of our “churn and change” Treasurer’s “orderly transition” to “net zero”, plus he’ll make us a global “energy superpower”. Enthralling stuff.

Capital Retro5:39 pm 04 May 24

The question is, will Tesla still be around in 8 years to honour their warranty?

We all know in 8 years time you’ll still be here whining like a 3 years old irrespective of what is happening with Tesla.

“The market” says $180 while a noted short seller of the stock, needing the price to go down to profit, says $14, one day.

It is rather the point that Tesla may be out-competed by other manufacturers, not that EVs will fail. As JS9 said, “Irrespective…”.

Do you ever understand the subject?.

Capital Retro2:38 pm 06 May 24

Is see you and JS9 have got the “silence CR” challenge this week.

I’m.still wondering about the long term affects of sitting on a battery everything you go for a drive. May sound great because the Greene’s say it’s “clean” but they don’t mention the manufuring and disposal pollution. Reminds me of the gumment incentivising natural gas not that long ago.

The other issue is availability of parts. My friend was hit in his Tesla by a driver back in September last year. The car is still off the road 8 months later waiting for parts.

I won’t be getting any EV any time soon.

Chinese makers leave Tesla in the dust is the real story on battery cars. Actual innovation rather than catering to rich boyz will make EVs affordable and less harmful to the planet

Charging companies are going out of business. Plenty of news articles on that. A charging station with four 350kw superchargers requires two megawatt or more of power. Electricity under Bowen is very, very expensive

You mean the outcomes of Taylor doing nothing to try and address electricity price pressures, surely? Indeed he actively hid them prior to the election.

Electricity prices are a result of a decade + of policy failures.

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