Why Tesla has slashed thousands from its prices

Electric car giant bucks the trend for increasingly expensive cars with a significant reduction in Australian cost.

Tesla has slashed prices in Australia as part of a sweeping strategy to maintain demand for its cars.

Tesla’s cheapest car, the Model 3 sedan, is $1600 cheaper in 2023, available from $63,900 plus on-road costs.

While rivals have increased prices, Tesla is slashing costs. Photo: Thomas Wielecki.

All-wheel-drive versions of the Model 3 have dropped by $3202 for the long range variant (yours for $76,900 plus on-road costs) and $3907 for the performance model (now $91,396 plus on-roads), once reductions in luxury car tax are taken into account.

The Tesla Model Y now starts from $68,900 plus on-roads ($3400 less than what it cost a month ago) and the all-wheel-drive performance model is $97,895 (down $3717).

The Tesla Model Y has dropped by $3400. Photo: Thomas Wielecki.

Popular options such as metallic red paint and 20-inch wheels have also dropped by $500, but Tesla has raised the cost of its delivery fee (now $1400) and ordering fee ($400).

The changes come as rival machines such as the Hyundai Ioniq 5 and BYD Atto 3 increased in price this year.

Tesla has also reduced the cost of its cars in major Asian markets such as Japan, China and South Korea.

Australian Tesla Model 3 examples come from China.

Most of Tesla’s cars in the Asian region – including Australia – are sourced from its gigafactory in Shanghai, China.

Tesla sales in China fell in December following the end of government electric car incentives worth around $2700.

Chinese Tesla sales in December 2022 were at least 20 per cent lower than the same month in 2021, prompting drastic action from the manufacturer.

Tesla has had a rough ride on the share market in recent months. Photo: Lillian SUWANRUMPHA / AFP

Reuters reported that the price reductions were “part of an effort to help stoke demand for output from its Shanghai factory, its single largest production hub”.

Increased production could help arrest Tesla’s falling share price, which has dropped by nearly 37 per cent in the last month and about 68 per cent since the same time last year.

While many brands have waiting lists approaching 12 months, Tesla’s website claims that a Model 3 ordered today could be delivered as soon as next month.