Kia will not have a price war with Tesla in Australia

The Kia EV5 has landed in Australia, and the Korean manufacturer says it won’t chase Tesla on price despite the potential of further price cuts from the US brand.

Tesla’s only SUV in Australia – the Model Y – continues to lead electric vehicle (EV) sales, although the company implemented multiple price cuts earlier this year to further boost sales.

The EV5, which rivals the Model Y, was launched with a drive-away price cheaper than the US brand’s equivalent model, despite many cuts.

Kia Australia CEO Damien Meredith says his brand won’t chase Tesla if Model Y prices are cut further.

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“We will not respond because we believe it is very, very important to protect the residual value of where you start,” Mr. Meredith said.

“We really believe that if a customer buys it at a certain price, they need the protection of that price stability and price consistency, and we’ve been doing that for a long time. We will continue to do that.”

A key factor for the EV5 was that it was able to undercut the best-selling Model Y on price at launch in Australia, and Kia succeeded with a drive-away price of $56,770 for the base Air variant.

While Tesla quotes a cheaper price of $55,900 on paper for the Model Y RWD, on-road costs are excluded, with drive-away prices ranging between $58,715 (Australian Capital Territory) and $62,553 (Western Australia).

Kia Australia has still managed to undercut Tesla despite the latter’s price cuts, with general manager of product planning Roland Rivero describing the Model Y as a “moving target”.

“We had to draw a line in the sand. [Kia head office] was well aware of the moves Tesla was making all the time, and in the end that wasn’t really the important point,” Rivero said.

“It wasn’t a matter of ‘can we achieve a price below the Model Y?’, but more importantly, making it as competitive as possible to achieve our sales ambitions.”

Kia expects to sell 400 EV5 units per month, less than the original target set prior to the car’s launch, and a prospect that Meredith says is “challenging.”

Despite the comparable price, Mr Meredith says the aim is not to outdo Tesla’s Model Y with the EV5, but rather to ensure it meets the brand’s key sales targets.

“We probably don’t look at it that way in terms of being a sales leader; I think it would probably be difficult to do that,” he says.

“We have set our sights on selling those 400 per month, and that will be a challenge in itself. I think there’s more to it than just the price – there’s the brand co-founded with Tesla and what that means for EV customers.

“We have to chew on that, so I don’t expect to outsell the Model Y in the near future.”

Kia had previously said earlier this year that it expected to launch up to 850 EV5s per month, which would have led to annual sales of 10,000.

Even that now-scrapped target fell far short of the Model Y, which recorded 16,697 Model Y deliveries in the first nine months of 2024.

Instead, Mr Meredith says the aim is for the EV5 to help Kia meet emissions targets under the New Vehicle Efficiency Standard (NVES), which comes into effect on January 1, 2025.

“As always, we take all competition into account. EV5 is an extremely important product for us, especially under NVES, which is coming our way soon,” he said.

“We are strategically aiming for a competitive price point, and then they need to make sure that it hits the kind of numbers that will allow us to accumulate enough credits so that we can continue to sell other internal combustion type products. It is strategic.”

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