We could see a Tesla under A$40,000 by 2023

    This morning Elon Musk announced many battery production changes, aimed at producing more cars, but also making Tesla’s more affordable.

    Musk revealed that they are working towards a new, smaller vehicle that would be priced at US$25,000.

    That would be the cheapest Tesla by far, with the cheapest Model 3 currently priced at A$37,990. Delivering a car that at it’s heart still delivers what we consider to be Tesla attributes (fast, great range) for US$12,990 less, is a very difficult challenge.

    Assuming Tesla are able to execute on the battery and production improvements discussed this morning at Battery Day, this would see the new Tesla vehicle be of a price point that’s much more approachable.

    If we take this the US$25,000 and convert it to AUD, based on today’s exchange rate, we end up and an Australian price of A$35,067. Of course we need to add GST of 10% to this, which would see a sticker price of A$38,574.

    Naturally, we need to add shipping costs and those depend on where the Australian cars are made. With Model 3 and Y set to move from Freemont to Shanghai, if the smaller car, let’s say Model 2, is also made there, delivery will be cheaper. For now, let’s use the current Model 3 delivery fee of A$1,375 and our total price is A$38,574 (well under the LCT limit).

    A Tesla vehicle at that price would be completely disruptive to the EV space, with our current cheapest vehicles like the Renault Zoe, the Nissan Leaf and the Hyndai Kona, all hovering around the A$50k mark. A Tesla at under A$40k heavily impact the demand on those EVs, as well as begin to significantly steal market share from more ICE brands.

    A smaller vehicle, won’t be a good fit for everyone, but it certainly opens the door to many more potential buyers who simply can’t reach the entry point of A$80k.

    Tesla believes they would be able to achieve a lower price car in the next 3 years. This places a release date for the vehicle in late 2023 or possibly early 2024 for Australia.

    Musk confirmed, this cheaper car will also come with FSD capability. That has some pretty big implications for the Tesla’s autonomous robotaxis. If you were an enterprising young fellow, you may be hovering over the buy button for a fleet of Model 3s. Given there’s about to be a new, cheaper option, it’s likely you may hold off for the cheaper car.

    While it’s unlikely 5 people will squeeze into a smaller car, it would happily transport 1-2 people, which makes up the majority of most car trips. This means the economics of using a fleet of cheaper vehicles, certainly becomes more appealing than using the comparitively more expensive Model 3s.

    If Tesla does get FSD approved for use in the next 1-2 years, ahead of the car’s release, we may see them offer multiple tiers, similar to what we experience with Uber. The massive advantage of a Tesla fleet, is the revenue that went to the driver, could go to Tesla instead, or the vehicle owner.

    At the end of the day, Tesla’s desirable cars are only a benefit to the world if people can afford them.

    Jason Cartwright
    Jason Cartwright
    Creator of techAU, Jason has spent the dozen+ years covering technology in Australia and around the world. Bringing a background in multimedia and passion for technology to the job, Cartwright delivers detailed product reviews, event coverage and industry news on a daily basis. Disclaimer: Tesla Shareholder from 20/01/2021

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