Tesla has reduced the prices on its Model Y and Model 3 by thousands of pounds in a move expected to help it compete in an increasingly competitive electric vehicle market in the UK.

Price reductions have been introduced in the US and European markets.

The Model 3 is now priced from £42,990, while the Model Y is priced from £44,990, which represent drops of £5,550 and £7,000 respectively for the entry level models.

Prices have also been reduced by as much as £8,000 on models higher in the range like the Model Y Performance.

A Tesla spokesperson confirmed to Fleet News’ sister title CAR that any customers with orders should contact their sales representative to discuss the price changes.

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.”

Price cuts put pressure on other EV manufacturers

Paul Hollick, chair, Association of Fleet Professionals, says that while the price cuts "aren't without problems", they have generally been welcomed by members.

Hollick says: "Simply, the price cuts make mainstream EVs more affordable to businesses and should put pressure on other manufacturers to take similar action in the coming weeks and months. In an EV market that has seen prices rising almost month-on-month recently, this is good news, we believe.

“However, it has also introduced an element of disorderly marketing for Tesla, which is never good news for residual values, and it will be interesting to see the reactions of both leasing companies and the pricing guides in the next few days."

There is also the matter of businesses that have just bought Teslas or have them on order at previous prices.

Hollick adds: "The differences between the new and the old prices are substantial and a move of this kind does unavoidably create ill-feeling. The company would do well to introduce some kind of redress.”

Fiona Howarth, Octopus Electric Vehicles chief executive, welcomed the price drops.

She says: “It’s no secret that the EV industry has been struggling to keep up with booming demand.

"The challenge for manufacturers has been to scale up quickly enough - to reduce wait times and get drivers into green cars, with low running costs. 

“Tesla is the Apple of the car sector. We’re delighted to see these EV leaders cut prices. 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.”

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