Tesla’s average cost to build an electric car is under $A45,000

A new report has revealed that Tesla has a large cost advantage over legacy car makers when it comes to building electric cars, with the average cost coming under $US30,000, or just shy of $A45,000. 

According to a Bank of America report that looked at Tesla’s costs to build EVs compared to other legacy car manufacturers, it costs Tesla $US10,000 less on components to build a car than the industry average.

The key findings of the report were shared by Tesla and EV enthusiast Sawyer Merritt on X.

This is part of the reason why the brand can continue to lower prices while still maintaining a reasonable lead on other manufacturers. (See the latest prices for all new EVs in Australia on our EV Models page)

Although the focus of the analysis in this report focused on the US market, its clear that Tesla has a similar advantage when delivering vehicles to the Australian market.

With all new Teslas arriving onto our shores coming from its Giga factory in Shanghai, the cost to produce a Tesla is expected to be even lower.

That’s thanks to the localised supply chain that exists in China of key components such as battery packs, drive units (motors), structural body components and a lot more.

Back in 2022, Grace Tao, Tesla’s vice president of external affairs, said that 95% of Giga Shanghai’s parts are sourced from local suppliers. 

This has been further improved with CATL, the largest battery maker, now having a battery plant right next to Tesla’s factory in Shanghai.

The impact of the localised supply chain on the costs of parts being used is clear as Tesla has continued to lower prices in Australia.

The last major cuts were seen just over a month ago when Tesla cut prices on its entry-level and most popular RWD variants. Prices on both variants were cut by thousands and now start at: 

• Tesla Model Y RWD SUV – $55,900 (down from the previous price of $60,900)
• Tesla Model 3 RWD Sedan – $54,900 (down from the previous price of $58,900)

With the pricing of key components continuing to come down and Tesla having a big cost advantage, it’s pushed many other manufacturers to follow suit in the local market.

It has also put significant pressure on new EV model entrants into the market from both new and existing brands with a few brands holding off on launches to get the price right in order to remain competitive with Tesla which leads the local market.

The lowering of costs is a good sign for consumers looking at making the shift to an electric vehicle. 

If leading brands like Tesla continue to keep their costs and prices low, other EV options will also need to be competitive and keep prices lower, helping EVs remain an affordable option for more drivers.