Tesla Model Y

Tesla Model Y was the third highest selling new car in the UK last year

Tesla has cut prices for its battery electric vehicles (BEVs) by up to a fifth across the US and Europe.

The company said the cuts were in response to falling supply chain costs, as well as lower costs from shifting components closer to factories.

The cuts come days after price reductions by Tesla in China, which sparked complaints from customers who had pre-ordered vehicles at higher prices or saw their cars lose significant value overnight.

However, Tesla in Europe said it would pass on price cuts to customers who have already ordered vehicles.

Prices in the UK for the Model 3 and Model Y have been cut by between £3,500 and £8,000.

Tesla said the cuts took the entry-level cost of a Model 3 in the UK to £42,900, with the Model Y cut to £44,900.

Paul Hollick, chair of the Association of Fleet Professionals, commented: “While they are not without problems, these price cuts are generally being welcomed by our members. Simply, they 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. 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.”

Tesla Model Y and Model 3 were the two top-selling new car models in the UK in December by a substantial margin, with the Model Y notching up 10,664 sales and Model 3 achieving 5,704. The Nissan Qashqai trailed in third with 3,506.

They were the two top-selling BEVs in the UK in 2022, and the Model Y was third in the overall market for the year with 35,551 sales behind the Nissan Qashqai on 42,704 and the Vauxhall Corsa on 35,910.