Kia won’t wage 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 reductions by the American brand.

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

The EV5, which serves as a rival to the Model Y, launched with a drive-away price that’s cheaper than the American brand’s equivalent model despite the numerous cuts.

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

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“We won’t respond, because we believe that it’s really, really 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 pricing stability and pricing consistency, and we’ve been doing that for a long time. We’ll continue to do that.”

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

While Tesla lists a cheaper price on paper of $55,900 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 reductions, with product planning general manager 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 that Tesla was continuously making, and at the end of the day that wasn’t really the main point,” Mr Rivero said.

“It wasn’t a case of, ‘can we achieve a price below the Model Y?’, but more so just get it as competitive as possible to be able to achieve our sales aspirations.”

Kia expects to be able to sell 400 EV5 units per month, down from the original target set ahead of the car’s launch and a prospect Mr Meredith says is “challenging”.

Despite the similar price point, Mr Meredith says the goal isn’t to outsell Tesla’s Model Y with the EV5 but rather make sure it hits the brand’s key sales targets.

“We probably don’t look at it like that as in regards to leader of sales; I think it probably would be difficult to do,” he says.

“We’ve got set our sights on selling that 400 a month, and that’s going to be a challenge within itself. I think there’s more to it than price – there’s the brand set up with Tesla and what that means to EV customers.

“We’ve got to chew away at that, so my expectation isn’t to be outselling the Model Y in the near future.”

Kia had previously said earlier this year it expected to bring in up to 850 EV5s per month, which would have seen it reach 10,000 annual sales.

Even that now scrapped target was well shy of the Model Y, which recorded 16,697 Model Y deliveries during the first nine months of 2024.

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

“As always, we’re mindful of all competition. EV5 is an extremely important product for us, particularly under NVES, which is coming our way soon,” he said.

“We strategically aim for a competitive price point, and then they’ve got to make sure that it hits the kind of numbers that allow us to to gather enough credits so that we can continue to sell other internal combustion-type products. It’s strategic.”

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