This week, 7 News reported on the banked-up Teslas at Port Melbourne; an image that has been tied to crashing EV prices and lower uptake. But that’s not really the whole story, and without being too much of a cheerleader for electric car sales, we really need to defuse some of the things being said about EVs at the moment.
Indeed Teslas are banked up at Port Melbourne, and yes, some markets are seeing faltering EV sales, but there’s quite a lot to unpack here. It’s not so complex that you could point to companies giving up on electric cars, or that there’s been a total failure of the growing electric car market, but rather what we’re seeing is the culmination of a few things.
Allow me to analyse what’s happening in the EV world for you, as someone who is stuck in it.
What’s with all the unsold Teslas?
Let’s start with Port Melbourne’s favourite, Tesla. When we interviewed the Director of Volvo Australia, Stephen Connor, he said something quite illuminating:
“There’s no value in what they’re [Tesla] trying to do. They’re just trying to sell a product to get into the marketplace by volume. We’re not going to sell our cars in huge volume. We will do this year, about 12,500 cars, next year and about 13,500 cars, so we’ve got a marginal growth expectation over the next five years. Why? Because we don’t want to flood the market, we don’t need to.”
There is a world of difference between what Tesla is doing and what other car companies making EVs, such as Volvo, Kia, Hyundai, and Subaru are doing. Those companies aren’t approaching the car market with the same strategy to Tesla, which involves flooding the market with a unique product and ample stock. A comparable company is perhaps BYD, which continues to set sales records in Australia with its more affordable EVs, with a similar approach to the Elon Musk-owned company. No wonder output from China Tesla factories is set to slow.
So when a company like Tesla drops prices dramatically by thousands of dollars three times in two months, it’s easy to pin on strategy. Volume isn’t shipping as hard as it once was for the once darling car company, as Q1 results illuminated, which has put Tesla in a precarious (predictable) position.
With growing alternatives to Tesla, it’s no wonder that images of parked Teslas at Port Melbourne have been circulating – and with alternatives on the rise, what appears to be happening is a flood of alternatives. In the U.S., for example, Hyundai, Rivian, and even Toyota EV sales were up, while Tesla and GM sales took a hit.
Thousands of Teslas are piling up at Australian ports as sales plummet across the country. The slowdown has motoring experts worried that the honeymoon is over for electric vehicles. https://t.co/MSQUAaaEsi @bethan_yeoman #7NEWS pic.twitter.com/yCiGM7qrzg
— 7NEWS Melbourne (@7NewsMelbourne) June 3, 2024
What about EV sales? Are they struggling?
There’s more to the ‘five per cent sales slump’ figure that’s being included with articles on electric vehicles. Last April, 6,530 EVs were sold in Australia, falling to 6,194 this April. EV sales also saw a rough slump in Australia between March (9.5 per cent of all cars sold) and in April (6.4 per cent), led by a 43.5 per cent drop in sales from Tesla.
In May, however, of all cars sold in Australia, EVs made up about 8.1 per cent – up from 7.7 per cent May last year, according to the Federal Chamber of Automotive Industries, the leading authority on sales data reporting. It’s also a month-on-month increase, up 6.4 per cent from April. Tesla on its own, per CarExpert, saw a 20.3 per cent drop in sales during the reporting period.
Despite all of this, the most popular model continues to be the Tesla Model Y. From NRMA, courtesy of FCAI sales data, EV sales went like this in the last month:
- Tesla Model Y: 1,609 sales
- Tesla Model 3: 1,958 sales
- BYD Seal: 1002 sales
- BYD Atto 3: 737 sales
- MG4: 565 sales.
Discounted models, such as the Polestar 2, GWM Ora, along with the popular new arrival Volvo EX30, also saw considerable sales increases. The Model 3 and Y went up in volume sold month-on-month, likely due to the sharp price drops, but down year-on-year.
So, was the sales drop a hiccup? I don’t think so. We’ll probably continue to see similar sales drops (and rises) as time goes on, and as more attractive models start to arrive in Australia, with greater range, charging speeds, and entry prices, we’ll get past a point of doom and gloom.
It’s easy for EV fans to forget that these cars, at the moment, don’t appeal to every lifestyle in Australia. For many, they are simply too expensive at the entry point, and promises of savings on fuel don’t gel well when you 1) need that money now for your own livelihood, or 2) rely on on-street parking, and wouldn’t reap the reward of home charging savings. For others, range anxiety is barely alleviated by the underdeveloped and (often not working) charging network – which my recent review of the GWM Ora demonstrates.
Also, how could we forget that three Australian states have flat-out scrapped their EV incentives? No doubt that being unable to claim thousands back on the purchase of an electric vehicle has put pause on a sale or two.
But I digress – let’s cover off one more thing.
What about the discounts?
It’s almost the end of the financial year, and many car companies are trying to clear stock with their own strategies. As far as the consumer is concerned, this has led to thousands of dollars slashed off of the MSRP of electric cars, but for many of the companies, we can drill into individual strategies. All of these price drops are coming at an appropriate time for business – in the runup to the end of the financial year – but we can pry as to why the models have come down in price.
We already discussed what it means for Tesla. Tesla is infamous for raising and lowering its prices in Australia depending on demand and targets, but the last two months have seen the most dramatic drops, likely because of the company’s poor Q1 results. No doubt the honeymoon period for Tesla, as the golden goose of electric cars, is fast approaching its end, especially as Chinese rivals MG and BYD tail it in Australia.
GWM adjusted the base price of its Ora too, normalising it across Australian states, but to be honest, this just seemed like a ‘right-pricing’ move. The Ora was always anomalous in its pricing, difficult to compete with the BYD Dolphin and MG4 side-by-side, but at its lower prices across the range, it becomes a much more attractive move. The same could be argued for the Ford Mustang Mach-E, as it attempts to remain competitive against the Model Y.
Discounts on the Nissan Leaf and the Peugeot E-2008 seem to be related to upcoming model releases, but also these are just… Not great cars, especially at their standard price points. The Peugeot E-2008 in particular saw a $25,000 price drop, which saw all of its stock sell out extremely fast. The Megane E-Tech also saw a discount, strangely so considering it just arrived in Australia, but this mostly just seems to be chasing an EOFY rush.
So what’s with all the EV doom?
People are right to be critical of electric cars. The way people treat petrol cars doesn’t particularly translate well to how they treat electric. Range and charging speeds are still a huge issue, especially on long highway drives, but this isn’t made any better by how poorly developed charging networks are across Australia (many of them don’t even have roofs!).
But we can’t say that it’s all over for electric cars right now. Sure, companies like Mercedes might be backtracking on EV-only plans, and companies like Ford might be dramatically adjusting spending on electric models, but it’s difficult to argue that EVs are coming to an end based on the sales data we have and photos of Port Melbourne.
Image: Zachariah Kelly/Gizmodo Australia