Tesla CEO and co-founder Elon Musk has acknowledged that the price of the Model 3 in Australia is on the high side, in a response to a post on social media platform Twitter on Tuesday evening.
Lamenting the cost of buying a dual motor Tesla Model 3 in Australia (around $A110,000)compared to its cost in the US, Twitter user EV-HQ posted: “Elon Musk this is what the $US40,000 dollars dual motor costs in Australia……. Surely there has to be some way we can cut this cost.”
“This does seem high,” Musk replied.
Looping in recent talk of a fifth electric car factory in Texas (which brought forth calls for an Australian factory), EV-HQ also suggested a solution.
“Giga Australia makes sense. Tesla would be the only major car dealer in Australia. Consider this seriously. Aussies need this,” wrote EV-HQ.
This does seem high
— Elon Musk (@elonmusk) February 12, 2020
While Tesla Australia’s Sam McLean did note in the 2018 EV Senate inquiry that Tesla might consider an Australian Gigafactory “of the opportunity arose“, that reality may be some time off, if at all.
But Musk’s response does beg the question, can the price of the Model 3 be lowered – and subsequently the Model Y which price modelling suggests it will be priced well out of the budget of the average Australian.
Australia’s shift to electric vehicles (EVs) is mind-numbingly slow when compared to other developed countries. A key reason behind this, often cited in surveys and studies, is the high price of electric cars compared to internal combustion engine (ICE) equivalents.
While EVs are more expensive than ICE cars globally because batteries currently cost a lot more than producing an engine, the Tesla Model 3 is intended to bring electric cars to the masses.
The Model 3 has had an amazing impact on the Australian car market, with its arrival last August playing a major role in tripling EV sales in 2019 to 6,718 compared to 2,216 in 2018.
In the US, the Standard Range Plus (SR+) with standard options costs $US39,990 ($A59,457 converted), and the dual motor Long Range (LR) with standard options costs $US44,690 ($A66,445 converted). (We do note the configuration in the tweet above is not in fact, a $US40,000 SR+ but a more expensive dual motor configuration.)
In Australia, the same models actually cost (depending on what state the vehicle is purchased in) around $73,000 including on road costs for the SR+ and about $96,000 for the LR. The Performance variant can cost as much as $106,000 drive away.
As with other electric and internal combustion vehicles, all Tesla cars are subject to stamp duty (state dependent), import and shipping costs as well as currency exchange rates. Once purchase costs exceed $75,526 for fuel-efficient vehicles, another 33% over the threshold as Luxury Car Tax (LCT) is added.
Tesla owners and aspiring owners alike weighed in on the subject, suggesting that the culprit is all the additional taxes and fees – particularly in the case of higher spec’d models, the Luxury Car Tax.
“The exchange rate plus our governments luxury car tax (was to protect our auto manufacturing now closed) is the real killer,” said Mark Young.
“FYI, I paid $18,657 in taxes on our Model 3. That was 21.5% on top of the cars actual price,” said Dr Sally.
The solution? Scrap the LCT, say some.
“It’s a disgrace its not a luxury car. It’s the tech and the exchange rate that makes it that high. Should be zero taxes for doing the right thing for the planet,” said Steve Grainger.
“The extra LCT shouldn’t be there, it’s no longer serving it’s purpose and the money is just free money for the @ato_gov_au,” said Australian Tesla Owners, referring to the fact the LCT was originally designed to protect an Australia car making industry which no longer exists.
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She specialises in writing about new technology and has been writing about electric vehicles for two years. She has a keen interest in the role that zero emissions transport has to play in sustainability and is co-organiser of the Northern Rivers Electric Vehicle Forum.