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Why Tesla is giving the Chinese car industry a leg up - and why Aussies could be the big winners with cheaper versions of the Tesla Model 3 and Model Y and more cut-price alternatives from BYD, GWM and MG | Opinion

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2024 Tesla Model 3.
Stephen Ottley
Contributing Journalist
3 Feb 2025
4 min read

Australians could be the big winners of the car industry fight between the two biggest powerhouses, as the American and Chinese duke it out on electric vehicles and tariffs.

Let me make one thing clear from the beginning — this is a car story, not a political one. But as with so many things in life, politics has become intertwined with it and makes it impossible to separate. Especially when someone so well-known for their role in the car industry, Elon Musk, has become deeply involved in politics and is now in charge of a new US Federal Government department.

Unless you’ve been living under a rock (or avoiding the news on purpose) you will have noticed the newly-installed US President Donald Trump is no fan of electric vehicles (EVs) — despite Musk reportedly spending US$277 million on his election campaign. One of Trump’s first acts as president was to cut the US government’s US$7500 tax credit for EVs, thus making a Tesla Model 3 approximately $200 per month more expensive in the US.

This follows the US government’s decision, under previous president Joe Biden, to ban Chinese cars from the US market, which is in the final stages of implementation.

At the same time, the European Union has slapped tariffs on Chinese-made cars, which is more bad news for Tesla, as well as BMW, Polestar and Volvo who also make EVs in China. In fact, it’s such bad news that Tesla and BMW have joined forces to sue the EU over the tariffs. 

So what does all this mean for you, the Australian new car consumer? Well, for starters, expect the US car industry to throttle-back on its EV plans, but not abandon them entirely, which means we could see more investment into models like pickup trucks and SUVs that could have appeal to General Motors and Ford here.

Tesla was already in a difficult position before the government cut its support for EVs. The American EV brand recorded its first ever decline in sales in 2024, dropping 1.1 per cent globally as the demand for its ageing line-up softened and the Cybertruck failed to provide a boost. 

It also means Chinese-made cars will need somewhere to go, both those made by Tesla (which is the Model 3 for Europe) and the other brands. Coming off the back of a 16.9 per cent sales decline in Australia, this could mean more big discounts in-store for local buyers considering a Model 3 or Model Y in 2025 and beyond. Tesla has shown little hesitation to slash the prices of its cars to drive sales, cutting it three times in two months in early 2024 on top of previous reductions and more recently cutting the Model Y to help make way for the facelifted version coming later this year.

On top of this, the American government’s scaling back on EV industry investment, which includes scrapping plans for a nationwide charging network, is only equalled by the Chinese government’s increased support for its own EV industry. It puts the world’s two largest car markets and car producers on diverging paths and it will shape the fortunes of both for at least the next decade to come - possibly longer.

Stephen Ottley
Contributing Journalist
Steve has been obsessed with all things automotive for as long as he can remember. Literally, his earliest memory is of a car. Having amassed an enviable Hot Wheels and Matchbox collection as a kid he moved into the world of real cars with an Alfa Romeo Alfasud. Despite that questionable history he carved a successful career for himself, firstly covering motorsport for Auto Action magazine before eventually moving into the automotive publishing world with CarsGuide in 2008. Since then he's worked for every major outlet, having work published in The Sydney Morning Herald, The Age, Drive.com.au, Street Machine, V8X and F1 Racing. These days he still loves cars as much as he did as a kid and has an Alfa Romeo Alfasud in the garage (but not the same one as before... that's a long story).
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