Why we're wrong about Tesla | Opinion

Is Tesla a luxury brand? 

It seems like a simple question on the surface, with many of you probably assuming it is based on its pricing, history and, arguably, its stock price. Indeed, in its home market, the USA, Tesla is often referred to as a ‘luxury brand’ and compared against the likes of Audi, BMW and Mercedes-Benz.

Indeed in the Australian market the Tesla is measured against luxury rivals in both the categories it competes. The Model 3 lines up against the likes of the Audi A4, BMW 3 Series and Mercedes-Benz C-Class, while the Model Y is compared against the Audi Q5, BMW X3 and Mercedes-Benz GLC.

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But when you take a closer look it becomes clear that there may be a difference between perception and reality, and that Tesla is in fact a mainstream brand that has - either by accident or design - managed to skew its image more upmarket.

When Tesla first arrived in Australia it was with the Lotus Elise-based Roadster and then its first bespoke models, the Model S and Model X. Both of these were six-figure vehicles, which naturally gave people the impression that Tesla was a luxury brand.

However, since then Tesla, at least in Australia, has shifted its focus to the smaller Model 3 and Model Y mid-size sedan and SUV. Prices for those models begin at $61,900 and $65,400 respectively, which are borderline premium prices. Or at least they were a few years ago, and there’s often a lag between buyers' perceptions and expectations and the market’s shift with inflation.

Tesla has very cleverly turned its idea of ‘minimalist’ design into an asset, when in reality it’s likely primarily driven by cost-cutting and production simplicity.

However, when you take a closer look at the current state of the EV market in this country, Tesla appears more inline with the brands traditionally considered ‘mainstream’ rather than ‘luxury’ - such as Hyundai, Kia and newcomer BYD.

For example, Hyundai’s Model 3 rival, the Ioniq 6, starts at $65,500, just $3600 more than the Tesla. While the Ioniq 5 SUV, which is a Model Y alternative costs Hyundai Ioniq 5 $65,000, $400 less than the Tesla.

The BYD Seal, arguably the closest thing to the Model 3, starts at just $49,888, undercutting Tesla by a whopping $12,012. And, based on our experience with both models, it’s not like the BYD gives away anything in terms of presentation or build quality. In fact, both the BYD and Tesla sold in Australia are made in China and, to be frank, the Seal looks like a more premium car at first glance.

The Ioniq 5 SUV, which is a Model Y alternative costs ,000, 0 less than the Tesla.

That’s largely because Tesla has very cleverly turned its idea of ‘minimalist’ design into an asset, when in reality it’s likely primarily driven by cost-cutting and production simplicity. Yes, the single, central touchscreen looks very hi-tech and modern in the Model 3, but BYD manages to have a screen both in the centre and a small one for the instrument display. And the Seal has indicator stalks and other ‘premium’ features that Tesla has dropped.

It’s all very clever branding and it has worked very well for Tesla. Personally, I’ll admit I fell into the trap myself, still thinking it was a premium brand despite the Model S and X disappearing long ago and the brand shifting to the mainstream part of the market.

So why is this important? Why does perception of a brand matter? Because as we continue to move towards an increasingly electric motoring future, the enormous success of Tesla impacts other brands and our perception of them. 

When Tesla first arrived in Australia it was with the Lotus Elise-based Roadster.

I’ve had many people question the “high cost” of a Hyundai Ioniq 5 or Kia EV6, but not bat an eyelid at the prices Tesla charges. And that’s because Hyundai and Kia are more established brands with an overt history as mainstream.

They have to fight a preconceived notion that they should be cheaper, rather than having these new electric models judged on merit.

It has afforded Tesla a major advantage in the EV sales race, but if you can change the way you look at the American brand, it will give you a fresh perspective of what’s on offer today and what’s coming in the near-future.