Why Tesla Cars Are Getting Cheaper When Others Are Getting Expensive?

AFR said that currently cars are expensive and the situation will continue to 2022.

Second-hand car prices have jumped 34 per cent on average in Australia since a year ago, and are up 10 per cent since the start of January. Moody’s Analytics senior economist Michael Brisson said on Thursday that even when supply of new cars built up again after a semiconductor shortage, high used car prices would persist well into calendar 2022 even though the rate of growth is now slowing.

Then I noticed that Tesla 3 deals are coming and coming and more are being shipped from Shanghai. Is it something special about EVs that is not affected by the global supply chain problem?

Should I sell my Holden Acadia while none-ev cars are expensive, and buy a Telsa?


  • +10
    • +13

      Tesla is the only car company that benefits from economies of scale? lol

      • +1

        Lol. I have no idea what your question is asking or why it's funny. Lol

      • +34

        Telsa is yet to reach economies of scale in comparison to say, Ford or GM. So costs improve faster with time, in comparison to Ford or GM.

        • Do Ford and GM make more electric cars than Tesla?

          • @dealsucker: It's more than just the "electric" part of the car. Chassis, safety systems, wheels, manufacturing process etc. - It is all baked in. While Ford or GM have had a head start, and therefore are at better cost structures, Telsa's costs are certainly improving quickly, and will reach a steady state in the near future.

            However, by comparison, Telsa has a tonne of software and telemetries in their cars. Software is very efficient at scaling (e.g. it does not cost much to add more), so they will benefit from that cost structure in comparison to GM, who while there is a bunch of software in their cars, often it's a smaller part

            • @chickensalad12: Apparently it takes Tesla 10 hours to make a Model 3, vs VW at 30 hours for an ID.3:


              • +2

                @Dogsrule: From what I read re: build quality perhaps Tesla should take a little more time…

                • @drprox: Perhaps they should, but they have been continuously improving over time, they'll get there. My 2021 Model 3 LR seems fine compared to our 2021 RAV4. The panel gaps are wider, but even along their length and relative to the other panel gaps, and all the trim seems to fit well. Can't notice any difference in the paint, although the M3 is white and the RAV4 is deep red so a bit hard to compare. I have noticed a bit more road noise on the highway than the RAV4, but that may well have to do with the larger wheels and tyres. Time will tell of course, but all seems well in my case.

            • @chickensalad12: Yeah. People in here are missing that point.

              Your Ford, GM, etc back in the day would have been equally as expensive as your Tesla today. Over the years they have improved designs, processes, tooling, etc and have the infrastructure that they can bring the cost of their cars down to what they are.

              Tesla is essentially starting from scratch, so the price of their cars needs to cover some of the cost of design, processes, tooling, infrastructure etc. As they sell cars and further improve, the cost per car will drop and they can pass that on.

              For Ford, Holden, etc they have (for the most part) improved their existing processes, infrastructure, etc as much as they can (economically), and thus don't generally have much of a cost saving to pass on - they do on particular models after they've been around for a while and they've covered the design costs, etc; but nothing to the level that Tesla would.

      • +4

        Many car companies get bloated and capital costs and r&d are very high as they end up making a million models with facelifts every 3 years and completely new designs every 7, that gets very expensive and you have huge staffing costs, they're very labour intensive.

        Tesla make 5 models and not much changes between the years apart from software updates or improvements in the technology to make it better and cheaper.

      • Yes for Tesla electric cars because they have been doing it for many years now they make iterative improvements to things like batteries and things that broke often (by making improvements) to bring their costs down and pass on the savings. They are like 3-5 years ahead of their competitors. The model 3 is excellent value compared to cheaper electric cars which cannot go close to the distance or have the same level of technology (or can almost drive themselves although that is an additional extra), I find when I configure cheaper electric cars to go the distance of the tesla Model 3 they cost more!

    • +3

      In part, it is a little bit economies of scale but there are other bigger factors in this instance. The Model 3 that has reduced in price is now coming out of China where they have ramped up production and made some other changes to the car that has also reduced the price. The biggest change is the battery that has a significant impact on the price. The range is slightly reduced as the energy density is worse but there are also some benefits as the new battery likes being charged to 100% (most don't like going regularly above 80) and should also last a lot longer (they now envisage around 20 years). The American-built Teslas have recently had a slight price rise in most countries but it is minimal and in line with normal price variations due to commodities, supply and demand etc.

      Now is a good time to sell an ICE vehicle and if you are interested, some good deals on EVs like Model 3, Polestar 2, Ioniq 5 (2 Chinese and 1 Korean car) with more affordable Europeans (compared to the more expensive European EVs we currently have) coming in over the next few months.

      • Any idea if the QC out of Shanghai is better than the QC out of the US? They were pretty dodgy iirc.

        • I've seen 2 chinese ones, and yes the QC out of China is much better than the old US ones. Don't know if the new US ones match as we don't really get them TMK

        • Early reports say that there is some improvement. Panel fit is still not as good as mainstream car manufacturers but better than it used to be. The biggest complaint seems to be excess wind noise on the highway. Rarely is it bad things like rain leaks. Most people believe the biggest breakthrough will be when they start to produce the car in two big moulds instead of many moulds. I think this is now happening for Model Y when it comes out of Germany. Not sure about China.
          I think if you are the type of person that wants a quality car with precision gaps and a traditional luxurious interior, they are not for you. If you are the type of person that likes tech packages, then they are an excellent buy (I still do not like how they do not support Apple Car Play and Android Auto as two very popular products and would have made transition easier for some people).

  • +62

    Elon's plan was always to make an expensive car and use that money to make a cheaper car, then use the money from the cheaper car to make an even cheaper car and repeat that process over and over again. While they're developing better batteries and more efficient electric powertrains the price comes down because they can sell more. Tesla aren't wasting time working out how to make better internal combustion engines or hydrogen powertrains like Toyota and other manufacturers seem stuck on.

    Tesla don't want to service your car, they just want to sell more of them. All the other manufacturers thrive on servicing and are in panic mode trying out how to figure out how to counter Tesla selling direct and not needing to put one on a hoist every 6 months. It's not hard to see the writing on the wall for all the dinosaur manufacturers if they can't catch up soon. Their business model is over.

    • +33

      then use the money from the cheaper car to make an even cheaper car and repeat that process over and over again

      Sweet… I'm waiting till they are free

      • +26

        pffffft, I'm waiting till they pay me.

        • +7

          This is like an investment. In 50 years Tesla will pay and practically endorse me to take and drive one of their vehicles. I'll be a millionaire, who needs super when you have Tesla

        • +5

          You laugh, but vehicle to grid technology is coming…. one day you will be able to sell your car battery power back to the grid to meet demand. Tesla are moving in leaps and bounds ahead of anyone…

          • @ProlapsedHeinous: Sell at a reduced rate what you've already bought from your electricity supplier at a higher rate. Still loss making overall, unless it's solar generated, but why not skip the car bit and the associated efficiency losses.

            • @banana365: Charge the battery during the day, release at night or during high pricing events. Some providers offer variable feed in tariffs.

              • @Freaksta: Which is assuming you don't use the car during the day or night. I get that it's an option and many people have a predictable/planned life but it's quite clear that selling back to the grid, whilst a good idea, is likely to be pretty niche.

                I'd love an EV (when the price drops considerably) but ICE is currently far more accommodating of flexible use requirements.

    • +4


      Other car manufacturers aren't servicing their own cars, the dealership perform the servicing.

      More like its the other way around. Tesla are panicking trying to streamline mass production that other manufacturers have perfected decades ago. Once the other manufacturers are tooled up for EV Tesla will be in trouble.

      • +6

        It's all part of the business model though. The dealership is willing to to sell the car without much profit because they know most of their customers will be back.

        • -3

          That does not make sense with a Tesla
          a. Tesla does not have dealerships (all Tesla managed outlets)
          b. Tesla have extremely small servicing costs

          • @Rally Dave: Shadow7412 was referring to ICE manufacturers in response to Ewan82. Some ICE manufacturers have already terminated their agreements with some dealerships.
            Also Telsla doesn't advertise. They have a backlog of orders running into next year. Whereas ICE manufacturers spend big on TV, sponsorship etc, largely promoting the vehicles technology (apple car play is usually the feature highlighted)

      • +4

        Tesla will catch up to the others in production far sooner than the others will catch up in software, user experience and self driving. If you need proof, you can check out any new chinese tesla and compare it to the old ones, and you can look at the market cap. Everyone knows it, it's going to be like Kodak, Nokia etc, except the auto companies are already scrambling to adapt.

        • +1

          'except the auto companies are already scrambling to adapt'

          And they will

          • +2

            @R4: Some will, some won't. Just about every non-chinese non Korean car company is taking a hit, while Tesla is going from strength to strength. Anyone looking at a trend line can see what's going to happen

            • +1

              @Jackson: Tesla is going to need to increase its profit trend line a lot of it ever intends to match it's market cap. It's in for some serious headwinds.

              Ford and GM are coming and coming fast. 10s of billions in new EV and battery factories under way. That will eat the $1600 or so they pay Tesla per Tesla car sold in the US. That isn't nothing. It's also competition for the EV market, these markers have big legacies and legions of fans so they will sell their EVs.

              In Europe you have cars like the EV golf selling as far as they can make them.

              Possibly the biggest threat is Chinese EVs, at 30-50% under the current market competition. An electric SUV on road for Aus$35-40k…. that's going to hurt the competition and put downward pressure on prices. Lower margins.

              The Koreans are starting to get a foothold. The Japanese, I'm not so sure, they need more electrics for export.. I understand why they want hydrogen cars, if they are dependent on energy imports it will be hydrogen. It makes no sense to turn imported hydrogen into electricity (losses), transmit it (losses) then into battery power (losses). It would be easier to just use it in cars in Japan.

              All that points to a mature car market in a few years time, tough competition, small margin, etc. Tesla will need to justify its market cap by making huge profits, bigger than any car company in history has ever achieved. At the current rate it'll need to make more profit than all the profitable car companies combined plus a lot more. It'll need 30%+ of the world's car sales with exaggerated margins.

        • Others are catching up quickly in software and Tesla is still struggling with quality. Although Tesla (Elon anyway) talks a lot about Full Self Driving capabilities, they are not even leading that race with some other systems being rated higher. They have faced many legal challenges about it as it is only an assistance system and still at level 2. Tesla have an advantage in development as it is using people out there as testers (which is highly illegal in most countries and a cause of many accidents) but I think will get there at some point. Obviously it is now used listening to their promises of when it will happen as they are wrong on that every year.

          • @Rally Dave: Please, Ford and GM are dinosaurs, don't expect them to innovate. You say China is going to eat their lunch, at least they have a lunch to eat, Tesla is the only non Chinese manufacturer selling any volume in China

      • +1

        I don't think they're worried about streamlining mass production, Giga Shanghai is already pumping out 2.4K vehicles every day:


        Giga Berlin & Giga Texas will have the same production capacity, plus Fremont gives production capacity of around 2.4m vehicles per year by EOY 2022:


        This graph of their production rate seems pretty healthy to me as well:


    • -2

      I think this business model you speak of is wrong, if pricing keeps on falling who wants to buy them when the time you drive it out the door it’s already dropped in price.

      Looking back on past Tesla posts, it seems like if you bought one a year ago you’d have taken a big hit just from price drop, and then throw in a good 20-%25% drop for being a used car and your Tesla will have lost a significant amount of money. Much much more than other traditional car brands.

      • -2

        Not true. Teslas have good resale value.

        • +5

          How can it be.

          You can buy model 3 SR plus for $61425 July 2021 brand new. https://www.ozbargain.com.au/node/637111

          if you had bought it July 2020 brand new, according to this post you would have paid $73,900. https://www.ozbargain.com.au/node/574620

          So if you bought in July 2020, how much could you sell your 1 yr old model 3 for?
          $61425? Impossible that’s brand new price. Maybe $55k? But who wants to pay 10% less for a old used car, maybe 50k?

          If you use a reasonable figure like 50, you would have paid 73,900 in 2020 and dropped to 50k a year later.

          I’m happy to hear you out, but the constant price dropping must mean you’re resale value drops, it doesn’t make sense otherwise.

          • +2

            @cloudy: No one is arguing that cars (telsa or otherwise) dont depreciate.

            As per below, Telsa model 3 has better resale than competitors. Even when the distance travelled is 50% less!

            2019 Telsa Model 3:
            Private Price Guide $42,200 - $46,000
            Trade In Price Guide $35,800 - $39,600
            *Average Km 30,000 - 50,000
            *Price When New $66,000

            2019 BMW 3 Series 320i
            Private Price Guide $38,100 - $41,600
            Trade In Price Guide $32,100 - $35,600
            *Average Km 20,000 - 35,000
            *Price When New $65,380

            • @hothed: Thank you Hothed - I should have said "better" resale value.

            • @hothed:

              2019 BMW 3 Series 320i
              *Price When New $65,380

              Issue is the "price when new" number is retail, before negotiation. In 2019, you could have bought a 330i with options cor mid-high 60's.

              So that would push the resale up.

              The Tesla, on the other hand, the retail price is the same as negotiated price - there is no bargaining.

              That's the main point you need to consider when taking data from redbook.

            • @hothed: bad comparison because anything euro has the worst depreciation around and has been like that for at least the last 3 decades across the board. (except supercars)

            • @hothed: I didn’t, and no one here said Tesla don’t depreciate.

              My point is, when RRP drops around 15%, by default you’re resale price has to drop 15% plus depreciation.

              Where as other brands don’t have this phenomenon, most brands update their car and keep the selling price or even inflate it by a few %.

              Those red book prices you pasted don’t seem to reflect what I see on ozbargain post, unless they mean a 2019 Tesla bought new in later half 2020?

            • @hothed: That's just the tip of the ICE-berg where it comes to EVs (and cars with a future potential autonomous function); expect 99% of ICE car resale value to plummet in the next decade or two, once the post-covid/post-chipshortage supply chain starts to stabilise.

    • You are just eating the marketing spin.

      ALL manufacturers try to reduce their production costs by putting in money to R&D from their previous products. That’s not a Tesla thing.

      As for servicing, nobody “wants” to service their products: they have to. It’s a consumer warranty requirement. And outside of warranty, they still don’t “want” to; they do it for a cost. In which case, it’s not a burden on the company, they make profit on it. It actually can increase the profit they can again invest in R&D.

      Tesla is successful, but they’ve yet to break into the scale of mass manufacture as other companies, and whilst I’m optimistic, they actually might never.

      • "Tesla is successful, but they’ve yet to break into the scale of mass manufacture as other companies, and whilst I’m optimistic, they actually might never."

        Tesla have production capacity of 1 million vehicles per year right now, and they are on track to achieve that production rate this year:


        Berlin and Texas open later this year, which adds at least another 1 million a year in production capacity. They'll be making more cars than Mazda, Mitsubishi, Subaru or Suzuki by end of next year. I think they've broken the mass manufacturing glass ceiling at last. Additionally, their profits have skyrocketed from $330M a quarter a year ago to $1.6BUSD this 3rd quarter:


    • I'd say that was tesla's founder's plan, more than it was Elons

  • +11

    Lol… You have not looked at the used second hand market for Tesla cars. You can have a new poverty pack base model for about $60k, or a used one for $70k.

    This is some Harley Davidson level of delusions.

    • -1

      most of the used ones come with fsd, plus its the other way around, most used ones are 50-60k, unless you are looking at the performance models

      • I wouldn't be so sure. Tesla have been known to yank features back when the previous owners sell it. Not sure if that has changed recently

        • I have heard that, but the used car section on the Tesla website shows what features come with the car, most of the ones I've seen show it coming with fsd.

    • -5

      There's no such thing as a Poverty pack Tesla. Interior and features are basically the same on a base model as they are on a performance model, aside from some speakers being deactivated, and the rear seat heaters being turned off. (You can turn them back on for $500).

      • +17

        Poverty pack is just slang for the most basic version available, but thank you for correcting us oh wise Tesla fan.

        • -5

          With the implication that the car is a stripper, like a GX Landcruiser Vs a VX.

        • +4

          "Poverty pack" is pretty Hyperbolic

    • +8

      Base model is $17k cheaper than the base model BMW 3 series, and it's faster, better equipped, more comfortable, doesn't require servicing and has better resale. So how is it overpriced?

      • +10

        I assume you're referring to the Model 3?

        So how is it overpriced?

        I don't use similarly overpriced base model BMW 3 Series as my benchmark for value here.

        • +6

          I'm not sure you understand the market.

          • +2

            @Burnertoasty: In what way?

            Because I don't agree with you that both the BMW and the Tesla you reference are overpriced compared to what else you could get with different badges on the bonnet?

            • +14

              @Seraphin7: Oh, what other premium EV with 400km range, a charging network, 0-100kmh in 5 seconds, autonomous lane keeping, glass room, car you get for $60k?

              • +12

                @Burnertoasty: How many vehicles can you get with a 700km+ range, a nationwide fuel network, more than adequate performance and other refinements for well less than $60k?

                If you want to drop $60k on a "premium EV" with a glass room (whatever the hell that is) … knock yourself out.

                If you've already dropped your $60k and are looking for validation, I'm sure there's many that will give it to you.

                The majority of punters want more for their $60k than what you/Tesla is offering. Evidence? Sales volume of other $60k vehicles vs. Tesla.

                • +1

                  @Seraphin7: Tesla 3 outsells the 3 series, C class and A4 (its competition) in Australia. So sales volume is a great example. Thanks.

                  I see you can't answer the question. Chalk that down as a loss for you?

                  • @Burnertoasty: Not on my figures, colonel.

                    I've got the 3 Series alone outselling the Teslas, let alone when you add in the C class, the A4 and any other number of wannabe "premium" vehicles at the $60k mark.

                    Let alone all the other brands that offer considerably more value at the $60k mark than narrow range of offerings you've quoted.

                    So, chalk it up however you want to, tiger.

                    • +16

                      @Seraphin7: Here's the actual figures chief, from V facts and Tesla shipping.


                      And you still can't answer a simple question.

                      • -9

                        @Burnertoasty: FMD, who'd have thought so many would want to purchase an overpriced coal-powered vehicle in 2021? I note the article you've provided doesn't seem to bother with a whole raft of other vehicles being are buying at the $60k price point.

                        In any event, it still doesn't change the opening proposition … why are they coming down in price? Overpriced to begin with.

                        And still doesn't alter the fact that the vast majority of vehicles being sold at $60k ain't Teslas or other similar vehicles.

                        What's the simple question? Chalk that down as a loss for me? Yes … or no … whatever makes you feel good when you stare into the mirror and think about all the internet points you won today.

                        • +11

                          @Seraphin7: Simple question:

                          What other premium EV with 400km range, a charging network, 0-100kmh in 5 seconds, autonomous lane keeping, glass room, car you get for $60k?

                          • -8


                            What other premium EV with 400km range, a charging network, 0-100kmh in 5 seconds, autonomous lane keeping, glass room, car you get for $60k?

                            I don't know and I don't care … because that "value proposition" is of no interest to me, nor that of most other car buyers at that price point.

                            • +6

                              @Seraphin7: Ah, so you can't answer the question. Seems strange that you think the car is overpriced, if you can't name the competition that's its comparatively overpriced against?

                              Maybe this is you projecting because you can't afford a $60k car? If that's the case, I suggest you work harder instead of whining about cars being too expensive (for you) online.

                              • -3

                                @Burnertoasty: Maybe I can't afford a $60k car. Maybe I can. Not sure what the relevance of that is to the question of the relative value of one $60k car is over another $60k car (or even lower price points).

                                Or is that just the attitude of Tesla owners? Everyone should have a coal powered an electric vehicle because reasons and anyone that can't afford one is just a loser who really should be liquidated for the betterment of the planet?

                                • +9

                                  @Seraphin7: Yet, not a single example of a better value car at $60k or lower price point. All talk.

                                  • +11

                                    @Burnertoasty: $60k is a premium price for a car for many people. Value is relative. I don’t think $60k for a car is good value when there are significantly cheaper options that do 90% (or more) of what a $60k car does.

                                    It’d be nice to be able to get a good quality EV (not luxury, just built right) with air conditioning, some airbags and not much else. All the other fluff largely isn’t necessary.

                            • -1

                              @Seraphin7: Lol you obviously care, that’s why you’re here commenting and spruiking your luddite religion 🤷‍♂️

                          • +4

                            @Burnertoasty: Tesla has a charging network in Australia ? Must be invisible.

                            • +1

                              @pompompom: Nope, it's extensive. All the way from Adelaide to past Noosa. East coast is basically completely covered. And you can also use all the other charging networks too, (chargefox with RACV discount is actually cheaper than Tesla). NRMA has a big network in NSW and in Victoria there is a charging the regions network through most country towns. I've always encountered other EVs at charging stations, but I've never had one that was full. (Tesla cars tell you how many superchargers are free before you get there). Basically, there is a supercharger station every 200km up the Hume/Pacific Highway, and in places like on the way to the ski fields. You can literally get pretty much anywhere you need to.

                              • +1


                                Nope, it's extensive

                                You think Adelaide to Noosa is extensive? And will get you ‘any where you need to go’? No good if you are in Perth. Almost useless if you like to go west of the coast.

                                You have a pretty limited view of Australia. Yes it covers a large part of the population, but no. It isn’t extensive (yet) and won’t get you ‘anywhere’

                        • +2

                          @Seraphin7: The tiger, chief and colonel going head to head!

                        • +1

                          @Seraphin7: My solar roof panels are not coal powered

                          • @dealsucker: How were they made? And how will they be disposed of when dead ?

                • +4

                  @Seraphin7: Who in their right mind would buy ICE at this point. Pay thousands a year more at the very least on petrol alone. Then there's maintenance parts etc etc. OUCH

                  • +4

                    @onlinepred: Me. The fact that Tesla have moved on from the standard 18650 to the 21700 then now the 4680 cell mean that battery tech has still long way to go.

                    Tesla reduces production cost by making Model 3 in one big piece instead of stitching smaller pieces together. Their manufacturing efficacy will continue to improve and prices will keep coming down.

                    • +1

                      @skillet: Yep, and meanwhile if you bought an EV, you could be saving many thousands each year….. Given how unreliable most ICE engines are, and how much maintenance costs are required to keep them running, I would take a current battery tech over them any day of the week. Really ICE cars should be far cheaper to try to even compete at this stage, but they aren't. Model S batteries are still going really well too - 9 years after release.

                      If you are looking at close to $60k for a family car right now, I wouldn't look elsewhere. If you aren't looking at spending that much, don't buy a new ICE car as the value will crash for majority of them in 4-5 years, they will be more expensive to own/run. Just hold on to your beater for a cheaper EV.

                      • +4

                        @onlinepred: Unreliable ice engines? On new cars at around $60k? Pass me some of what you're smoking

                        • @poulay: Buy an sti lol. Or literally any German made car after 5 years of ownership.

                    • @skillet: Teslas flagship vehicles still use 18650 battery. It's just the form factor, chemistry can be the same.4680 might have better density at a pack level (I believe its 16%), but the real reason they are moving to 4680 is reduced manufacturing costs.

                      • +5

                        @Burnertoasty: Bro I'm out of popcorn.

                        • @JoBevo: "passes over a bag" i still have some left… This is mildly more entertaining than the bachelorette

                      • +2

                        @Burnertoasty: Tesla is relatively young company compared to many established brands and I believe they also move quickly which upgrades their product overtime. Take a look at this door handle design and how it has changed and improved over a few revisions. https://www.youtube.com/watch?v=Bea4FS-zDzc
                        From lots of mechanical switches to no switch at all. The latest design is not only a lot cheaper but it also up reliability. This is why I say I stick to ICE, Tesla has much more to improve and I don't want to be a guinea pig for another company.

                        I already invested heavily in German ICE machines and I know they are reliable because I worked on them and the shortcomings of the drivetrain are well documented and resolved by updated parts. These cars more or less grown from proven previous generations of design and improvements where as Tesla is a complete brand new product with exception of running gear such as suspension system and brakes.

                        There's also concern about battery fire where parked cars catch fire out of no where. This is rare but not impossible. I love my cars I park them indoors. I know Tesla offers Lithium Iron Phosphate batteries which is extremely safe but the capacity is poor. Therefore, I will continue to roll on pumped fuel until better battery is out there.

      • +10

        Tesla build quality is where FORD Australia was at with the XF falcon.

        • +2

          Oh that old gem. Promulgated by people who have never actually been in a Tesla.

          • +1

            @Burnertoasty: Well I've been in a few Teslas … and I can assure you that, for my money, they ain't worth what people are paying for them.

            • +5

              @Seraphin7: Sure you have chief.

              • +7

                @Burnertoasty: Oh that old gem. Promulgated by people who just can't believe that others may have a different perspective to themselves.

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