Why Teslas Cost So Much In Australia

Why Teslas Cost So Much In Australia

Elon Musk responded to a tweet recently that criticised the cost of the Tesla Model 3 in Australia. The CEO of Tesla agreed in his response, stating that the price did indeed seem high.

While EVs aren’t cheap, the Model 3 has been pegged as a budget Tesla. But when you dig into the costs, it’s quite the opposite here. So why are Teslas so expensive in Australia?

The Cheapest Tesla In Australia

The baseline Model 3 is the cheapest you can buy anywhere. But while this can be a sub-$50K vehicle in the U.S., it starts a lot higher here in Australia.

The lowest price tag you’ll see on a Tesla Model 3 in Australia is $69,425, but that’s before on-road costs are taken into account. $70,000 isn’t exactly what you would call an affordable option, and as we already reported, Elon Musk agrees.

But a lot goes into the inflated price tag.

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Currency Conversion

Starting with a simple one. Like with any product, the face value price in the U.S. is not going to be the same as in Australia. Our dollars are worth different prices. In general, a car that costs $50K in the U.S. is going to have a higher number attached to it in Australia before you even take things like import tax into account.

Tesla Extras

Like with any car, the baseline price of any Tesla is just a jumping off point. If you want to add some of the fun and fancy extras, it’s going to cost you.

Using the Model X as an example, any colour other than white will is a minimum of $2,200, with non-standard wheels costing between $2,900 and $8,000. If you want Tesla’s current full suite of self-driving capabilities (Auto Pilot is included for free) it will be an additional $8,500.

There’s also a tonne of other upgrades and accessories you can throw on top.

Tesla On-Road Costs

Similar to extras, Teslas are no different to any vehicle in that they incur on-road costs. The overall on-road-cost will vary from model-to-model, especially when it comes to calculating the Luxury Car Tax (LCT). The state you live in will also effect this.

As an example, here is what it can look like for a $134,695 2019 Tesla Model S being purchased in New South Wales. As an FYI a $1,375 delivery fee and $150 order fee in the base price.

The on-road costs alone $25,531 to the final figure.

Tesla Luxury Car Tax

A particularly bad piece news for prospective Tesla buyers is Australia’s LCT, which was covered briefly above. It’s worth explaining in a little more because it is arguably the key reason why Teslas are so expensive in Australia.

LCT adds 33 cents of every dollar the car costs to the overall price. To look at it another way, it adds 33 per cent tax onto the cost of a vehicle that qualifies.

This pricing bracket can change but the 2019-2020 tax year a LCT is added to fuel-efficient vehicles that cost $75,526 pr over. For non-fuel efficient vehicles it applies to anything over $67,525.

As we explained here, EVs fall into the fuel-efficient vehicle category because of their lack of petrol usage. Some might argue that the LCT being defined by fuel usage should mean that EVs should be exempt. Not only that, axing the LCT for EVs would be one way to encourage uptake in support of the environment.

However, this is not currently the case. Because every Tesla available in Australia, including the entry-level Model 3, costs a minimum of $75,526, it’s going to get have the 33 per cent LCT added to the overall price.

Tesla And EV Incentives In Australia

Unfortunately there aren’t a great deal of government incentives to encourage EV adoption in Australia. But there are a few state-led ones.

Stamp Duty and Registration

In the ACT new EVs pay $0 stamp duty for the car purchase as well as a 20 per cent discount on registration. In Victoria EVs are exempt from regular ‘luxury vehicle stamp duty. EV owners pay $8.40 per $200 of the market value of the vehicle, as opposed to up to $18. $100 off annual rego is also offered.

In Queensland both EVs and hybrids pay a reduced stamp duty – $2 per $100 up to $100K and $4 per $100 for anything over $100K. Regular ‘polluting vehicles’ pay up to $6 per $100 in stamp duty.

These, along with renewable energy and solar power incentives are detailed further on Tesla’s Australian website.

This article has been updated since its original publication.