Tesla has slashed up to £8,000 from the price of its cars in an effort to make its vehicles “more accessible”.
The American EV brand has cut between 10% and 13% from the list price of its Model 3 and Model Y cars in the UK after similar moves in the US and China. An entry level Model 3 now starts at £42,990 - down from £48,490 - and Model Y starts from £44,990, a reduction of £7,000.
Higher performance versions of both cars have also seen significant reductions. Long Range variants of both models have fallen by £5,000 while the top-spec Performance versions have had £8,000 slashed from their asking price. A Long Range Model 3 now costs £50,990 and a Performance spec costs £57,990. The equivalent Model Ys are £52,990 and £59,990.
The changes mean that the models now undercut several key rivals, including the Kia EV6, Hyundai Ioniq 5, Volkswagen ID.4 and Ford Mustang Mach-E. Tesla has said that any customer who has ordered but not taken delivery of their car will be charged the lower price.
The American firm claimed the cuts were in response to stabilising supply and production costs but observers have also suggested that softening demand could be behind the move.
In a statement announcing the changes, the brand 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.
“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 Europe, the Middle East and Africa.
However, Dan Ives, an analyst at investment firm Wedbush, told the Financial Times: “It’s no secret that demand for Tesla is starting to see some cracks in this global slowdown for 2023”. He called the cuts “the right medicine at the right time” and predicted they could increase demand by as much as 15% this year.
The Model 3 and Model Y were the two best-selling EVs in the UK in 2022 and the Model Y was the third best-selling car overall. However, the market is growing rapidly with new all-electric models from more established car brands affecting demand for the once-pioneering models.
The announcement comes a week after it was revealed that the price of used Teslas has plummeted in recent months. Car valuations expert Cap HPI announced that three of the five worst depreciating EVs last year were Teslas, with a one-year-old Model 3 losing 23% of its value.