Tesla has announced it has slashed the price of its electric cars in the UK with immediate effect, sparking outrage among existing customers – especially some of the 16,000 drivers who took delivery of vehicles at the higher price just last month.
The auto maker confirmed on Friday that it has cut the price of both the Model 3 and Model Y as of today across Europe and the US. In the UK, prices have been lowered by as much as £9,100, with the company citing ‘normalisation of some of the cost of inflation’.
Tesla owners who have received cars in recent weeks are understandably upset by the move and are calling to be compensated or provided with free charging.
One reader told This is Money: ‘After being pushed to take delivery in December I am furious about the fact the exact same model and spec I took delivery of on 23 December is now £7,000 cheaper.
‘This has made me lose all faith in the company after having multiple issues with the car since delivery also.
‘How will they make it right to me and many other customers?’
Good news if you plan to buy a Tesla; bad news if you’ve recently taken delivery: The US brand has confirmed it has slashed the price of its Model 3 and Model Y with immediate effect
Another told us they had picked up a new Model Y on 31 December and that same car today is going for £4,000 less.
They said: ‘As a small business owner, making a big capital investment was a tough choice. Thus I am underwhelmed at the move, especially as the car at the price I paid was offered with a ‘limited time discount’ of £3,000 which was seemingly misleading by design.
‘This is my first Tesla and EV, so far so good, with the exception that the stated range is 283 miles, but the maximum I’m getting is 260.’
Another This is Money reader, David H, said he had taken delivery of his Model Y four weeks ago at a cost of £60,000.
‘Of course it is upsetting when an item you have just bought drops in price but with such an enormous amount involved it is gutting,’ he explained.
‘If Tesla wants to encourage sales they should guarantee the current price and refund anyone who bought since their last price rise.
‘Or at least provide some other compensation, like free fast changing for the next three years.
‘If they can afford to drop the price by £10,000 it means they were overpriced originally.’
Are you one of the customers who took delivery of a new Tesla in December? Let us know what you think…
If you’ve recently taken delivery of a new Tesla at the higher prices, let us know your thoughts on today’s cuts by emailing email@example.com
Paul J also got in touch to say he’d ordered his Tesla Model Y Long Range back in June 2022 for delivery on 1 December 2022, paying a total of £62,290.
He said this was slightly more than a friend had spent when purchasing the same car months earlier in April 2022.
‘This is so wrong and we should be compensated in some way its not a few hundred pounds its a few thousand pounds,’ he told us.
‘They should either give a refund or some sort of free charging credit.’
Adrian K emailed This is Money to say he is one of the customers to take delivery last month and therefore miss out on the price cuts.
‘We took delivery of our Model Y performance on 24 December – not our choice as no other date was offered and we didn’t want to lose car, as Tesla are known to allocate it to another customer.
‘Now I’ve read they’ve dropped the price by 7k! Gutted.’
Fellow December customer James S told us: ‘I took delivery just before Christmas at the higher price. I am very disappointed. I called Tesla today and they offered no help.
‘I bought a Model Y Long Range model. They did offer 6,000 mile of supercharging as an incentive at the time.’
Hannah H also gave a quick reaction to the news having purchased a Model Y last year and collected it recently.
She emailed: ‘I bought a Model Y and collected it on 27 December to see they have now reduced my model by £9k!!’
‘I have emailed the two contacts I have from Tesla and waiting for a response.’
Similar surprise price reductions announced in China earlier this week ignited anger among existing Tesla customers, hundreds of whom stormed showrooms across the country to vent their frustration at paying 24 per cent more for the same cars just weeks earlier.
The move is a double-blow for existing owners, with This is Money revealing earlier this week that demand for used Tesla cars has plummeted in the last four months.
It has seen the price of year-old examples dropping by more than a fifth compared to their value in January 2022, which in some cases is a decline of up to £18,000.
How much does a new Tesla cost today?
The Model Y SUV – the best-selling electric car in Britain last year and the third most-bought new car across all fuel types – now starts from £44,990, having cost customers from £51,990 up until Thursday evening.
The biggest reduction is on the range-topping Model Y Performance, which now costs £59,990, having previously been priced at just over £69,000.
As for the Tesla Model 3 – last year’s second most popular new battery electric car – the entry price now starts at £42,990.
The biggest cuts to the Model 3 amount to £8,100 – also for the range-topping Performance variant.
This could see a rise in demand for Tesla’s smallest car, with the price cut meaning the Model 3 now costs less than some of its biggest rivals.
It will undercut the Kia EV6 (from £45,245) by £2,255 and ring in at £160 less than the entry Polestar 2 (from £43,150).
The biggest reduction is on the range-topping Model Y Performance, which now costs £59,990, having previously been priced at just over £69,000, according to Electrifying.com
The Tesla Model 3 now starts at £42,990 following the price cuts, meaning it now costs less than some of its major rivals
The company says the price cuts are the result of being able to pass on lower overheads to buyers.
However, industry insiders have raised concerns about the appetite for Teslas in recent months, both on the new and used market.
Experts said the brand is ‘doubling down’ on a discount drive it started in Asia as demand slows against the backdrop of a weakening economy.
The Elon Musk-led company missed its target in 2022 to grow deliveries by 50 per cent annually and reported that sales of its China-made cars hit a five-month low in December, underlining the hit from rising interest rates and growing recession fears.
In a statement issued on Friday morning, Tesla UK 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.’
The statement continued: ‘As local vehicle production continues to increase and we gain further economies of scale globally, we are making Model 3 and Model Y even more accessible across EMEA [Europe, the Middle East and Africa].’
Protesters gather at a Tesla showroom in Chengdu, Sichuan, China, on 6 January after the brand announced huge price reductions on its new cars
Crowds also gathered inside the showroom in Chengdu. Demonstrators slammed the sudden discounts of the Tesla Model Y and Model 3, claiming they had missed out on the price cuts
Price cuts will be celebrated by potential buyers but they’ve enraged existing customers
While the price cuts are good news for buyers looking to order a Tesla from today, it will irk customers who have placed orders ahead of Friday 13 January and especially those who bought the brand’s electric cars in the last few months.
This includes 16,368 motorists who took delivery from a massive shipment of vehicles that arrived in December, of which 10,664 were Model Y SUVs and the remaining 5,704 Model 3 saloons.
It means customers in the UK who received their Teslas last month could have saved in the region of £130million if they had delayed their purchases to January.
Several members of a Facebook group for UK Tesla owners also went online to express their frustration at the policy.
One wrote: ‘I just picked up the car yesterday. What should I do? Go to Tesla and give back the car? I can’t believe after a few hours from picking up the car I lost £5k.’
The reductions were described as ‘shocking’ by one person, who wrote that they ‘paid £5,000 more last week’.
Another described a period in late November and early December as the ‘worst three weeks to get a new Tesla in history’ due to the subsequent price cut combined with other issues.
He added: ‘(It) would be nice if they made a gesture to us.’
Autocar says a Tesla spokesperson has told the magazine that all undelivered orders will have their pricing updated automatically to reflect the changes announced on Friday, provided that the original fee is higher.
Today’s surprise price cuts follow similar reductions announced in China earlier this week.
This caused angry protests at Tesla dealers across the country as new owners demanded rebates, having seen the price they paid for their cars slashed by up to 24 per cent.
This is Money has contacted Tesla UK for further comment regarding if it plans to reimburse customers who took delivery of cars in December. We have yet to receive an official response.
Protesters outside a Tesla showroom in Chengdu, Sichuan, China, on January 6, 2023
Customers overseas have also been having their say on the price reductions.
Greg Woodfill in Seattle, who bought a Model Y in December, had considered waiting until the new year to get the US subsidy, but was lured by a discount at the time of $3,750.
‘It’s a punch in the gut, to be honest,’ he told Reuters on Friday, adding that it feels unfair Tesla sought to boost fourth quarter sales with discounts, only to cut prices a month later.
‘If they knew they would drop the price this much, they should have just done it in December.’
A This is Money reader in the US also wrote to us to express their dismay at the price cuts.
They said: ‘I took possession of a 2023 Model Y three weeks ago on 22 December 2022. We had been waiting for a year for the price to drop and were planning to wait at least a couple of months in 2023 to purchase a Model Y, depending on price, availability, and what the the US federal rebate was going to be ($7,500 or $3,750).
‘But when Tesla announced they were offering a $7,500 rebate for those taking deliveries on new cars during this 10 day window, we thought this was our chance.’
They went on: ‘Let me be clear: For those who purchased a MY or M3 three or six months ago, there really is not much you can complain about; Tesla may have had some plans to lower prices in the future but most likely didn’t know when.
‘Similarly, nothing could really be said if Tesla had waited three months into 2023 to lower the prices.
‘But they knew they were going to drop prices exactly three weeks after baiting everyone with a $7,500 rebate.
‘And please do not justify this as, “just business”; there is good business and there is dirty business when you purposely screw over customers.’
They concluded: ‘If Musk has an ounce of integrity, he would offer some compensation…say a $13K rebate…to those customers that took delivery during these 10 days in December. He didn’t do it in China, there is no reason to believe he will do it here.’
How much has Tesla slashed its car prices in different markets?
Tesla cut prices for all versions of its Model 3 and Model Y cars in China by between 6.0 per cent and 13.5 per cent, according to calculations by Reuters based on the prices shown on its website.
The starting price for Model 3, for instance, was cut to 229,900 yuan ($33,427) from 265,900 yuan.
The latest cut in China, along with a price cut in October and incentives extended to Chinese buyers over the past three months, mean a 13 per cent to 24 per cent reduction in Tesla’s prices from September in its second-largest market after the United States, according to Reuters calculations.
Tesla cut the prices of Model 3 and Model Y cars by about 10 per cent each in the country, the first time it had done so since 2021. The price for the Model 3 rear-wheel drive version is now 5.369 million yen ($40,091), down from 5.964 million yen.
Tesla’s price cuts in the country differed from model to model, but ranged from about 6 million won to 10 million won ($4,725 to $7,875), a local Tesla sales official said.
The price of Tesla’s basic Model 3 rear-wheel drive vehicle was listed as 64.34 million won ($50,637) on the company’s website on Friday. Its Model Y Long Range sports utility vehicle was 84.999 million won.
Tesla’s US price cuts on its global top-sellers the Model 3 sedan and Model Y crossover SUV, were between 6 per cent and 20 per cent, Reuters calculations showed.
The basic version of its Model Y now costs $52,990, down from $65,990 previously. The company also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States.
Tesla cut prices on the Model 3 and the Model Y by about 1 per cent to almost 17 per cent depending on the configuration.
Customers buying the Model 3 for 44,990 euros ($48,638.69) will now get a further price reduction through a government subsidy of 5,000 euros. The upper limit for the EV scheme is 47,000 euros.
Responding to the announcement issued on Friday, Ginny Buckley from specialist website Electrifying.com said: ‘The news from Tesla today will be welcome news to many who are looking to buy a new car, particularly as other electric car manufacturers are increasing their prices.
‘However, there will be plenty of customers who took delivery of a new Tesla in December who are bound to be less than impressed by the move, which could ultimately undermine confidence in the company.
‘Car makers will usually carefully manage prices and incentives to avoid crashing used values and upsetting customers.
‘Those looking to buy on finance could also take a hit, as the uncertainty makes it difficult for leasing companies to predict how residuals may look at the end of the finance term.’
She added: ‘This controversial move from Tesla is bound to send shockwaves through the industry.
‘With the premium brand now sending signals that it’s becoming much more mainstream; it now means the Model 3 costs less than rivals from brands such as Polestar and Kia.’
Experts say Tesla’s price cuts will not only upset customers but undermine confidence in the company
Fiona Howarth, CEO of Octopus Electric Vehicles, had a far more positive spin on the announcement.
‘Tesla is the Apple of the car sector. We’re delighted to see these EV leaders cut prices,’ she explained.
‘By heavily investing in their supply chain, they continue to make EVs increasingly affordable.
‘It’s over to other suppliers to keep up – opening up low cost, fun electric driving for all.’
Double blow for existing Tesla owners with used values taking a hit
While some will welcome the lower price of the luxury electric cars, this latest move will likely increase tensions between existing customers and the brand fronted by Elon Musk.
Used electric car values are in freefall
Valuations data seen by This is Money suggests that demand for second-hand electric cars is in decline – and it’s impacting Teslas most.
The price of a year-old Model 3 is down 21.4% compared to what it would have been valued at in January 2022, while the Model S has slipped 20.5%, which translates to a financial loss of almost £18,000.
The Model X crossover is also down 12.9% in a year.
– Read the full report on used electric car values
Many Tesla drivers were already infuriated over their ownership experience over Christmas, having been forced to spend hours waiting for available charging points while attempting to visit friends and family over the festive period.
The price reductions will be a double-blow to those who took delivery of Teslas in recent months who are already seeing the value of their cars go into freefall.
According to valuation data supplied to us by Cap HPI, a one-year-old Model 3 with 10,000 miles on the clock today is worth £36,300.
Some 12 months earlier, a Model 3 fitting the same description was valued at £46,200.
That’s a fall in value of 21.4 per cent, or £9,400.
Second-hand Model S saloons have seen a similar level of value decline, falling £17,916 on average in the last year, down from £87,266 in January 2022 to £69,350 today – a drop off of 20.5 per cent.
The Model X is also down 12.9 per cent, which translated to a financial loss of £12,829.
Electrying’s Ginny Buckley told us: ‘I’m concerned about the knock-on effect this will have on used Teslas, as slashing prices on their new cars by this much will have a huge impact on their resale values.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
#Tesla #slashes #price #electric #cars #effect