Hype of EVs over as demand normalises and Tesla boss Elon Musk’s behaviour hits home

Motorists are ditching electric vehicles as Tesla and other big carmakers slash prices and used EV resale values also plummet, Car Group says.

CAR Group managing director Cameron McIntyre says big price falls from manufacturers has reduced demand for EVs.

Australians are turning away from electric vehicles – even previous EV enthusiasts – as Tesla and other big carmakers slash prices, sparking steep depreciation in used values, according to new research from Carsales.

Less than a third of Australians say they are considering buying an EV – down from 56 per cent in June 2022.

In other markets, some EV owners have begun to steer away from Tesla following chief executive Elon Musk’s political manoeuvrings after he backed Donald Trump and became one of his closest advisers.

Dutch media company EenVandaag found that nearly three in 10 Tesla owners are considering selling their vehicles, with survey participants saying they feel embarrassed by Mr Musk’s behaviour.

Tesla CEO Elon Musk with Donald Trump.

But executive Cameron McIntyre, chief executive of Carsales owner Car Group, said it was too early to say if the same trend was happening in Australia, and the market has begun to “normalise” following initial hype.

“If you go back to 2022, EVs were still the new kids on the block. Everyone was pretty excited about them. You roll forward to today, they’ve been around for some time and they’re just another drive-train,” Mr McIntyre said after he hiked Car’s half-year dividend 12 per cent after presenting the company’s results.

He said big price drops in the market have turned people away from EVs. Early last year, Tesla slashed $10,000 off its most affordable model, the Model Y, in a series of cuts over several months, making it cheaper than a Toyota RAV4 Hybrid.

China’s BYD has also announced last month it would bring the first sub-$30,000 EV to Australia.

“People say once you’re an EV driver, you’re never going back to anything else. Around 2022, we would see stats where it would be 95 per cent of people that we survey say that they are EV owners and would buy another EV,” Mr McIntyre said.

“That stat is now about 82 per cent. What you’re seeing is normalisation. But you are also seeing people who have purchased an EV, when they go to dispose of it, they’re looking at the second-hand value of the car.

“The wholesale price of an EV relative to the EV price is quite a difference. And so the depreciation that people take on the perks of a new EV can be quite substantial. So you’ve had prices in EVs coming down over time, and people buying new ones – and then several months later, the retail, new retail price comes down and that has an impact on their second-hand value.”

2025 Tesla Model Y.

Tesla sold 739 Model 3s and Model Ys combined in January – a 33 per cent fall compared to the 1107 deliveries in the same month in 2024. It was Tesla’s weakest result since July 2022.

Car Group’s shares fell 7 per cent in midday trade to $38.16 after it missed consensus earnings estimates.

It reported earnings before interest, tax, depreciation and amortisation of $302m in the first half of the year, compared with consensus estimates of $307.7m.

Citi analysts also cited higher-than-expected capital expenditure for the share price fall but said the “overall result is quite resilient given tough industry conditions in the US and private (car market) in Australia normalising”.

Mr McIntyre said overall used car turnover remained high – despite the fall in EV demand – and expected to deliver “good growth” in proforma revenue, proforma EBITDA and adjusted profit after tax on a constant currency basis in fiscal 2025.

“Demand for cars has been good. Supply has certainly increased. At the end of December, we had over 240,000 cars on the site. Today, it’s about 225,000 which is seasonal.

“You’ve got more new car manufacturers entering the country. There’s no supply issue with most makes and models. Conditions are certainly probably close to where they were, pre-Covid from a supply side, but with more competition in the market than we had pre-Covid as well.”

Cars on the assembly line during a tour of the Tesla Giga Texas manufacturing facility.

Group revenue rose 9 per cent to $548m, while net profit firmed 5 per cent to $123m.

Revenue from its Australian business jumped 9 per cent to $232m. North American revenue increased 8 per cent to $148m, while Asia leapt 10 per cent to $65m. Latin America also performed well, rising 11 per cent to $97m.

“The opportunity ahead of us is significant. We operate in diverse geographies with large, under-penetrated, addressable markets. We have multiple levers to deliver future growth, and we are accelerating the exchange of knowledge and ideas between each of our global businesses,” Mr McIntyre said.

“With a robust balance sheet and prudent leverage, we are strategically positioned to invest in further innovation and continue to deliver excellent results for our customers.”

Car Group will pay an interim dividend of 38.5c share, 50 per cent franked, on April 14.

Carmakers have faced increased competition from the likes of China’s BYD.

Originally published as Hype of EVs over as demand normalises and Tesla boss Elon Musk’s behaviour hits home