Tesla aggressively cuts prices of Model 3 and Model Y by £7k

Tesla has aggressively cut the price of its entry-level electric cars by around £7000, in a surprise move designed to defend itself in an increasingly competitive market.

Sales of EVs continue to bloom and reached nearly 17% of the UK new-car market in 2022, according to the latest figures. However, the cost of living crisis, recessionary pressures and soaring energy bills are headwinds that have made electric cars less attractive in the past 12 months.

The price adjustments are seen as a move by Tesla to protect its no.1 position in the UK market. It had a 3.4% market share in 2022 – more than four times that of Jaguar.

Tesla price cuts 2023: what you need to know

The reductions announced on 13 January affect the two smallest Tesla's, the Model 3 saloon and Model Y compact crossover:

  • Tesla Model 3 prices £42,990
  • Tesla Model Y prices £44,990

That represents a saving of exactly £7000 for the Model Y (above), which previously started at £51,990 for the single-motor rear-wheel drive model that recently joined the range.

Why is Tesla cutting prices?

The company explained its logic in a statement: ‘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.’

Is it a move to shore up its sales in an increasingly competitive market? Almost certainly. Chinese brands, such as Ora and MG, are arriving in Europe with attractively low prices and it’s likely that Tesla is moving defensively to protect its current market dominance.

It was the largest EV brand in the UK in 2022 and sold more electric cars than Peugeot, Land Rover, Volvo or Skoda did of all their products, electric or oil-powered.