Tesla Model Y RWD launches in UK, at much higher price than Australia

On Friday, Tesla quietly launched their single motor Rear-Wheel Drive (RWD) version of the Model Y in the UK and other European countries. 

Prices of the newly RWD variant happen to be thousands more than what Australian order holders have paid so far. In fact, they are up to $16,000 higher than Australia.

The Tesla Model Y has been a very popular EV in many markets, including in Australia where Rear-Wheel Drive and Performance variants were launched in June. 

Like Australia, two variants of the Model Y have been on sale in the UK for many months now but unlike Australia, both were Dual-Motor AWD models. 

Now the RWD model appeared on Friday in Tesla’s UK design studio. A follow-up email was sent to Tesla’s UK subscribers advising of delivery in late 2022 if they so chose to order one.

Looking at the basic specs in the email, the RWD model offers 283 miles of range which converts to roughly 455kms. That’s the same range as the Model Y RWD offered in Australia which indicates it’s the same Shanghai-built RWD model that the UK customers will be receiving. 

The interesting part of the Model Y RWD release in the UK has been the pricing. The design studio shows the price of the Model Y RWD in the UK at £51,990.

Converting that price to AUD given the current exchange rate between the two currencies gives us a price above $88,800. That’s $16,500 more than what Australians would pay if they ordered the car today. 

For some context, the Model Y RWD variant launched at $68,900 back on June 10th 2022 before prices were increased a week later

There could be various reasons for this price increase including high inflation in the UK, transportation costs and higher Value added Tax, VAT (sits at 20%). 

What does this tell us about the future of Model Y pricing in Australia and where could Tesla be going with these launches?

Long Range potentially becoming less important with increased material costs

Tesla launched the Model Y in Australia with the RWD and dual-motor Performance models. The Performance models use Nickel based battery technologies with higher energy dentistry. 

Tesla has made it clear in its quarterly reports that it would like to keep costs under control while maintaining industry-leading margins. 

With Nickel prices going up, the AWD model cost of production has also been increasing. To minimise these costs, Tesla aims to use more Lithium Iron Phosphate (LFP) battery packs than the RWD single-motor Model Y has. This has been shown in Tesla deliveries in the first half of 2022 where over 80% of the EVs Tesla delivered contained an LFP battery.

Given the Model Y launched in the UK last year, the Nickel based batteries were cheaper than they are in the second half of 2022. That combined with Tesla’s Shanghai plant upgrade now completed, the capacity to produce more Model Ys than ever has been achieved. 

Tesla Shanghai is expected to have record production capacity which means that they can now confidently open to more markets, and sell more EVs while maintaining a higher margin. 

New batteries for Model Y may add more range to RWD model

Not only that, there seems to be another trend brewing in the background which is all to do with batteries and the range of Model Y.

Tesla originally launched the Model Y RWD (previously known as SR+) model in the United States with 393 km of range. It was then removed from that market due to not having enough range. When Tesla launched their Model Y RWD in the Australian market this year, it offered 455 km of range. That’s a 15% bump on the previously cancelled single motor SR+ Model Y.

Now there are rumours floating around that Tesla may be awaiting deliveries of CATL’s next generation LFP batteries with added Manganese which could bump the range once again to closer to 500 km on the WLTP cycle. 

This could be a bit of a game-changer if it happens. It would potentially bring the range of Model Y, very close to the more expensive dual motor Long Range model but much cheaper to produce. That would help Tesla maintain high margins at a time when key components to make EVs are increasing in price.

From this analysis, it seems that Tesla may possibly be maintaining two variants in most markets. These would be the single motor RWD model with increased range and the top-of-the-range Model Y Performance. 

This would be beneficial for Tesla to further simplify their Model Y range while maintaining industry-leading margins. For customers in Australia, it could mean a long-range variant of the Model Y might be just around the corner. It would just have a single motor instead of the two motors currently being offered in the UK’s right-hand drive market today.