Tesla has significantly cut UK prices for its Model 3 and Model Y in a bid to boost demand.

The Model 3 saloon now starts from £42,990

It means the Model 3 saloon now starts from £42,990 while the Model Y crossover is priced from £44,990. Price cuts run across the ranges and are down by between £3,500 and £8,000, depending on the model. The largest drop is for the Model Y Performance.

Tesla has also cut prices in Europe, following revisions in the US and China.

The move follows a drop in demand for electric vehicles and a fall in the electric carmaker’s share prices.

A spokesperson said the brand had broken its record globally in 2022, with vehicle deliveries growing 40% YoY to 1.31 million and production increasing 47% YoY to 1.37 million. SMMT new car registration data for last year shows the Model 3 and Model Y were the best-selling BEV models in 2022 while the Model Y came in third place as one of the best-selling cars overall.

They added: “As we exit what has been a turbulent year of supply chain disruptions, we have observed a normalization 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 EMEA.”

The largest drop is for the Model Y Performance, which falls £8k to £59,990

The discounts are being levied with immediate effect – and Tesla has confirmed that undelivered orders will have pricing updated automatically, provided that the original price is higher than the new price.

For fleets, the price cuts will impact residual values and will mean revisions to leasing rates – but have still been greeted within the sector.

Paul Hollick, chair, Association of Fleet Professionals, said: “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 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.”

Fiona Howarth, CEO of Octopus Electric Vehicles, applauded the move and said it set an example to other EV makers: “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.”