Tesla shock as it slashes new car prices by up to £9,100

Tom Barnard

14 Jan 2023

Tesla has slashed prices of both its Model 3 and Model Y, with £8,100 off the entry-level price of a Model 3 and a £9,100 cut for the Model Y Performance. The Model 3 now starts from £42,990 and the cheapest Model Y is £44,990.

While this is good news for buyers looking to buy a car now, it is sure to cause outrage among Tesla customers who bought in December, which was a bumper sales month for the company. A total of 16,368 people bought Teslas in December (10,664 Model Ys and 5,704 Model 3s) at the old, higher prices, meaning that British customers buying Teslas last month could have saved £130 million if they'd bought in January instead. It has also emerged that buyers were pressured by Tesla staff to take delivery in December. A similar move with smaller price cuts in China caused angry protests at Tesla outlets across the country as new owners demanded rebates.

Tesla hopes to head off some criticism in the UK by saying it will honour the new prices for anyone who has ordered recently but is yet to take delivery.

Ruth Larcome from Berkshire bought a Model Y in December. She said: “I am very disappointed. Tesla obviously knew they were going to slash their prices when we took delivery of our car last year. They told us if we didn’t accept our Model Y Performance on 22nd December we would lose it and have to wait another three months. We went on holiday on 24th December and returned on 4th January so it has hardly been used, but our car has just lost about 15% of its value. 

"As a gesture of goodwill I would expect some form of recompense from Tesla. I am tempted to hand the car back for a refund as I am within my 30 day cooling off period, which is a shame really as the car has grown on me…”

Ginny Buckley and Nicki Shields with a white Tesla Model Y The Model Y is now comparable on price with a Skoda Enyaq

The move will also send shockwaves through the industry, with the Model 3 now costing less than rivals such as the Kia EV6 and Polestar 2. A Model Y is now just £2,000 more than the cheapest Skoda Enyaq 80. Using the the companies' own finance calculators, the PCP repayments for a Model 3 would be £522/month while a Model Y is even cheaper at £466. Using the same terms, an EV6 is £710, a Polestar 2 is £625 and an Enyaq 80 would be £587. Ford's cheapest Mach E is a whopping £745. 

It also means the Model Y is cheaper on a PCP than an entry level diesel or mid range petrol version of a Volkswagen Tiguan, which costs £469 and £482 respectively.

The Tesla price reductions will also have a knock on effect on used values which have already seen drops of 15% in Model 3 values in the last three months.

In a statement, Tesla said: “Our focus on continuous product improvement through original engineering and manufacturing processes have further optimised our ability to make the best product for an industry-leading cost. As we exit what has been a turbulent year of supply chain disruptions, we have observed a normalisation of some of the cost inflation, giving us the confidence to pass these through to our customers.”

We asked Tesla for further comment and if there were any plans to compensate existing owners, but have yet to receive a reply.

The company's used car values have been falling in recent months

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