Will stronger AUD lead to price drop

[Greg Liz]

Before making the final decision to buy, we are waiting to see if Tesla treats the Australian market equitably. It would seem fair that as prices went up when the AUD crashed due to coronavirus effects on markets that prices would now be restored to the previous levels as for the last 3 weeks plus the AUD has been back at the same levels seen prior to AUD drop caused by coronavirus market effects.

Added to the above is that Tesla has recently reduced prices for the same models in the US and China as well as other countries – for factors not related to exchange rates. Is Australia to see those price decreases or are Australian consumers to be treated differently?

In the meantime, we are using the waiting time to consider other options. Is anyone else waiting for a price restore?

 

[jgdc]

Hi Greg,

I don't think that anybody outside Tesla senior management would know what they are planning for AU pricing. I think it would be reasonable to assume that prices will not go up (with one caveat*) and the next revision will probably be July 1 or 2. So probably hold tight.

There was a drastic short negative blip (now corrected) in the AUD/USD forex rate but you can't necessarily equate this directly to the price rise. Big companies work on forward exchange rates and hedging, not blips. But Tesla may be quicker than most on this I guess.

My only bit of certain advice would be to get the Blue (I may be biased!).

*FSD will most likely rise as it is going up USD1000 on 1 July (their time) according to Elon. We avoided the last 1k increase as we did not have the new features at that point. We have those now. FSD is currently USD7000 in the US plus state taxes. It is currently AUD8500 including 10% GST. The raw maths does not look good on it staying near that level for us.

 

[EcoCloudIT]

Before making the final decision to buy, we are waiting to see if Tesla treats the Australian market equitably. It would seem fair that as prices went up when the AUD crashed due to coronavirus effects on markets that prices would now be restored to the previous levels as for the last 3 weeks plus the AUD has been back at the same levels seen prior to AUD drop caused by coronavirus market effects.

Added to the above is that Tesla has recently reduced prices for the same models in the US and China as well as other countries – for factors not related to exchange rates. Is Australia to see those price decreases or are Australian consumers to be treated differently?

In the meantime, we are using the waiting time to consider other options. Is anyone else waiting for a price restore?

The AUD is 6% less than it needs to be for price restoration from 6 months ago....I don't think we're going to see a price reduction....

 

[Greg Liz]

The AUD is 6% less than it needs to be for price restoration from 6 months ago....I don't think we're going to see a price reduction....

What makes you say that? Throughout the 2nd half of the 2019 calendar year, the AUD mostly hovered between 67 and 69 cents US with only a few brief forays above or below that range. Then in 2020, the AUD nosedived through 65c in January 2020 and then down to 57c in March. By the end of the 2nd week of April 2020 the AUD was around 63c – which was when Tesla markedly increased prices for Australian models. For nearly a month now, the AUD is again hovering between 67c and 69c – leading me to believe that Tesla would restore Australian prices to what they were before the April coronavirus related price increase. Why would it need to go another 6% higher?

 

[Greg Liz]

Hi Greg,

I don't think that anybody outside Tesla senior management would know what they are planning for AU pricing. I think it would be reasonable to assume that prices will not go up (with one caveat*) and the next revision will probably be July 1 or 2. So probably hold tight.

There was a drastic short negative blip (now corrected) in the AUD/USD forex rate but you can't necessarily equate this directly to the price rise. Big companies work on forward exchange rates and hedging, not blips. But Tesla may be quicker than most on this I guess.

My only bit of certain advice would be to get the Blue (I may be biased!).

*FSD will most likely rise as it is going up USD1000 on 1 July (their time) according to Elon. We avoided the last 1k increase as we did not have the new features at that point. We have those now. FSD is currently USD7000 in the US plus state taxes. It is currently AUD8500 including 10% GST. The raw maths does not look good on it staying near that level for us.

Thanks for your thoughts; they sound very sensible. If my wife had her way, we would just get a Leaf right now because of the increased price difference. I am going to hold on though until the 1st week of July. I would hate to cave before then and get the Leaf - to then see the 3 and the S drop in price.

As it happens I like the blue and she prefers the white (not because of cost); so that would be another discussion to finalise if we do get a Tesla.

 

[moa999]

Depending on whether sales are impacted or not they might hold out until Aug/Sep deliveries are made.

Otherwise you just get a bunch of people cancelling and reordering

 

[EcoCloudIT]

What makes you say that? Throughout the 2nd half of the 2019 calendar year, the AUD mostly hovered between 67 and 69 cents US with only a few brief forays above or below that range. Then in 2020, the AUD nosedived through 65c in January 2020 and then down to 57c in March. By the end of the 2nd week of April 2020 the AUD was around 63c – which was when Tesla markedly increased prices for Australian models. For nearly a month now, the AUD is again hovering between 67c and 69c – leading me to believe that Tesla would restore Australian prices to what they were before the April coronavirus related price increase. Why would it need to go another 6% higher?

Tesla held tight and didn't change the price as much as they could/should as the AUD dropped during 2018/2019. We averaged around 0.76 in 2018 and 0.71 in 2019....the drop to 0.57 is not what our current prices are based on (Tesla taking a big haircut here)....so I will feel until the AUD recovers (which it may not) to around 0.72 (about 4% increase from average now) we will not see price drops however due to losses occurred in the past Tesla may not drop prices until/when the AUD recovers to about 0.73 (about 5.5-6% increase on current 2 week average).

I am not expert and if Tesla start loosing sales they could very well drop prices if they have the capacity to do so however if they are selling as many cars as they can produce for AUD then they may just leave the current price as is for the moment (especially considereding finance is now cheaper).

 

[Greg Liz]

Tesla held tight and didn't change the price as much as they could/should as the AUD dropped during 2018/2019. We averaged around 0.76 in 2018 and 0.71 in 2019....the drop to 0.57 is not what our current prices are based on (Tesla taking a big haircut here)....so I will feel until the AUD recovers (which it may not) to around 0.72 (about 4% increase from average now) we will not see price drops however due to losses occurred in the past Tesla may not drop prices until/when the AUD recovers to about 0.73 (about 5.5-6% increase on current 2 week average).

I am not expert and if Tesla start loosing sales they could very well drop prices if they have the capacity to do so however if they are selling as many cars as they can produce for AUD then they may just leave the current price as is for the moment (especially considereding finance is now cheaper).

I disagree that the AUD averaged 0.71 in 2019. See: XE: AUD / USD Currency Chart. Australian Dollar to US Dollar Rates
There is also the recent drops in price in the US, China & elsewhere. The S recently dropped USD$5000 and the 3 dropped $USD2,000. Do you think those drops will be reflected in Australia - or do you think we will be treated differently because we are such a small market and Tesla will think it is not worth trying to win more sales here as it is trying to do in other markets? FWIIW, I think we probably won't get those price drops but that is pure speculation.

 

[Onshore]

The missing link here that we don’t, and will never know, is where Tesla is at with its FX hedging position for the AU operations.

That aside, the currency movements do justify a price cut.

I believe they make any pricing adjustments at the start of each Quarter.

 

[Greg Liz]

The missing link here that we don’t, and will never know, is where Tesla is at with its FX hedging position for the AU operations.

That aside, the currency movements do justify a price cut.

I believe they make any pricing adjustments at the start of each Quarter.

Very true re their hedging position. Your thoughts, along with those of EcoCloud & JGDC, are much appreciated. haven't put me any closer on deciding whether to go leaf or Tesla - nor when to pull the trigger. We will probably be replacing our other car late this year or early next year - so not having any idea what, or when, Tesla might do we may just get a Leaf now and then Tesla for our other car. I'm going to now go and find a metal coin to toss.

 

[EcoCloudIT]

I disagree that the AUD averaged 0.71 in 2019. See: XE: AUD / USD Currency Chart. Australian Dollar to US Dollar Rates
There is also the recent drops in price in the US, China & elsewhere. The S recently dropped USD$5000 and the 3 dropped $USD2,000. Do you think those drops will be reflected in Australia - or do you think we will be treated differently because we are such a small market and Tesla will think it is not worth trying to win more sales here as it is trying to do in other markets? FWIIW, I think we probably won't get those price drops but that is pure speculation.

Price drop because of currency increase against the USD is one thing (and I think Tesla may hold tight on that one) but price drops because of a significant price drop in USD price would filter through to Australia (I would think).

You can use XE none paid as an exchange check if you wish...but the AUD to USA in the year 2019 averaged 0.70-0.71 according to Macrotrends.

 

[Greg Liz]

Depending on whether sales are impacted or not they might hold out until Aug/Sep deliveries are made.

Otherwise you just get a bunch of people cancelling and reordering

The trouble is, once the Aug/Sep shipments are full, further sales will come on later shipments. If they announced a price drop after the Aug/Sep deliveries are made, all of the newer purchasers that were made after the filling of those shipment, could likewise cancel and re-order. I don't see how they could ever get around that type of timing issue.

 

[EcoCloudIT]

The trouble is, once the Aug/Sep shipments are full, further sales will come on later shipments. If they announced a price drop after the Aug/Sep deliveries are made, all of the newer purchasers that were made after the filling of those shipment, could likewise cancel and re-order. I don't see how they could ever get around that type of timing issue.

In the past they just contact the buyer and pass on the decreased price.

 

[EcoCloudIT]

AUD down to 68.5c to USD.....could go to 66c....

 

[baillies]

My unscientific observation is they adjust pricing once a 5c threshold has been maintained ie below 65c for x weeks so price change. I don’t expect the price to change until we are above 70c for a few weeks. Also they tend to change the price once deliveries have been completed from the last shipment. Fingers crossed we can get a price drop in July ready for Sep deliveries.

 

[Greg Liz]

AUD down to 68.5c to USD.....could go to 66c....

Also could go to 69c.

 

[EcoCloudIT]

Also could go to 69c.

Could go to 55c....who knows....

 

[moa999]

From SandyP at Whirlpool, no pattern from previous price changes in AU

- Sep 13, 2019 (All) - End of Qtr
- Nov 18, 2019 (PERF variant) - Middle of Qtr
- Apr 10, 2020 (All) - Early in Qtr

 

[cjad]

I'm picking mine up on Saturday. When I emailed the Tesla consultant to say all funds transferred I also said I hope piece doesn't drop July 1.
She didn't deny it....

 

[matsoutback]

I'm picking mine up on Saturday. When I emailed the Tesla consultant to say all funds transferred I also said I hope piece doesn't drop July 1.
She didn't deny it....

I'd take that with a grain of salt, the consultants would not know I'm pretty sure.