EV price wars could continue as Tesla won't rule out more cuts

Despite Tesla cutting prices for its models multiple times in recent years, local executives deem future “significant changes” to pricing to be unlikely – but the company won’t rule them out.

Tesla has cut prices in various markets including Australia at different times, most prolifically in early 2024. In Australia, that meant price reductions of nearly $10,000 for the Model Y in just two months, while the Model 3 was brought down by $7000 in the same period.

The Model Y was reduced to as low as $55,900 before on-roads, but when its updated version was announced earlier this year, it was listed at $63,400 before on-roads for the Launch Series RWD. Pricing for the standard RWD was then confirmed as $58,900 before on-roads.

Tesla Australia country director Thom Drew outlined that the pricing adjustments were a result of “efficiencies” found throughout the Model Y’s life cycle, leaving the door open to future price cuts at the same time.

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“We’ve always advocated for bringing down the cost of our vehicles where efficiencies are found, and there was a lot of that with the development of the Model Y program,” he told CarExpert.

“There were a lot of updates to that vehicle within its lifespan, and also efficiencies with the factory, loads of changes.

“So I think we got the pricing down to where it should be, in a really healthy price range for that value proposition.”

When Tesla repeatedly cut prices in 2024, there were far fewer rivals for its products locally. Since then, the Model Y has gained direct rivals from brands such as BYD, Deepal, Xpeng and Volkswagen, among others.

Despite the cuts, Tesla’s local sales have been on a significant downward spiral over the past 12 months, managing just 500 deliveries for the entire month of April 2025.

That was almost 76 per cent fewer EVs than it sold in the same month last year, placing it 23rd on the sales chart just ahead of Porsche, but behind other luxury brands like Land Rover and Audi.

Key rival BYD sold more than six times the number of vehicles last month with 3207.

Pricing is now up by $3000 for the updated base Model Y RWD, but down $1000 for the Long Range AWD. Mr Drew says he doesn’t expect the updated Model Y to be dramatically reduced, though cuts could come in either the form of small discounts or cheaper variants.

“As far as the current product goes, there was a premium put on the entry-level vehicle, the RWD, but also a slight reduction of the Long Range, so we are being dynamic with how we’re setting that pricing strategy,” he told CarExpert.

“As far as the future goes, I would be very surprised if we ever make significant changes to prices on these products, but refinements will happen as we continue to find efficiencies and so on, or potentially different variants at lower price points.”

While no cheaper variants have been confirmed, it’s possible Australia could receive something like the stripped-back base Model 3 revealed in August last year.

That car is currently for Mexico only, and has multiple features removed along with cloth seats and a downgraded sound system

It’s priced at 749,000 pesos, or 50,000 pesos (~A$4000) cheaper than what the base model cost before those features were removed.

That price still works out to be roughly A$60,000, which is up from the better-equipped Australian-market RWD that costs $54,900 before on-road costs.

It’s also around US$40,000 (A$62,293), which means even as a basic Model 3, it’s more expensive than its US$38,990 (A$60,734) counterpart north of the border and some way off from Tesla CEO Elon Musk’s promise of offering a US$25,000 (A$38,950) vehicle.

MORE: Tesla Model 3 gets even cheaper… but will it come to Australia?