Tesla is lowering prices for electric cars across Europe and the United States to boost demand

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Tesla has cut prices by as much as a fifth across the United States and Europe to boost demand for its electric cars in the face of an economic slowdown and fierce competition from established brands.

The electric car maker said the cuts, which industry figures say bring prices to a two-year low, were in response to lower supply chain costs, as well as lower costs from getting components to factories.

The latest drop comes after days of price cuts by the brand in China, which prompted complaints from customers who pre-ordered cars at higher prices or saw their cars lose significant value overnight.

Some Tesla customers protested the Chinese cuts outside showrooms in Shanghai, Wuhan and Shenzhen earlier this month.

Tesla in Europe has tried to deflect any similar criticism by saying it will pass on price cuts to customers who have already ordered cars.

In the United States, Tesla has cut prices by up to $13,000 across its entire model range, cutting the price of some models by as much as a fifth, according to changes on its website.

UK prices for the Model 3 and Model Y – the two most affordable cars in its range – fell by between £3,500 and £8,000 overnight, according to industry figures and prices listed on Tesla’s website.

Tesla said the cuts brought the entry-level Model 3 cost in the UK to £42,900, with the top-riding Model Y cut to £44,900.

Other modifications lowered prices, such as the introduction of free black paint in Ireland. Previously only white was included, with other colors costing extra.

The move comes as shares in the group have fallen by more than two-thirds in the past year on concerns about slowing demand, just when the company opened factories in Berlin and Shanghai and rivals including Volkswagen and Hyundai saw sharp rises in their sales. electric car.

Wedbush analyst Dan Ives called the cuts “the right medicine at the right time.” “It’s no secret that demand for Tesla is starting to see some cracks in this global slowdown of 2023,” he said.

He added that the cuts were an “offensive move” by Tesla that could raise demand by up to 15 percent in the next year.

Fiona Howarth, chief executive of leasing group Octopus Electric Vehicles, said the cuts will make Tesla cars “increasingly affordable”.

“It’s no secret that the electric vehicle industry is struggling to keep up with the growing demand,” she said. “We are happy to see the leaders of electric vehicles lowering prices . . . it is up to other suppliers to keep up.”

Tesla, which does not operate through traditional dealerships but sets prices centrally, raises or lowers prices periodically as supply and demand fluctuates.

It has been steadily raising its prices in recent months due to strong demand globally for electric vehicles, and as costs have been rising across the industry.

“We’ve seen some huge jumps, and it’s not that great for the market,” said one person who monitors prices. “It risks people losing faith in Tesla.”

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The cuts come after a year in which Tesla sales rose 40 percent to 1.3 million globally. In the UK, its Model Y was the best-selling electric car, and the third-biggest seller overall.

As leading economies prepare for an economic slowdown, the auto industry has been waiting for a drop in orders, something investors and analysts say is likely to hit Tesla first because of its shorter order book.

A Tesla spokesperson for the UK and Ireland said the price cuts were introduced due to lower costs.

“As we emerge from what was a turbulent year of supply chain disruptions, we have seen some cost inflation normalize, which gives us confidence to pass it on to our customers,” said the company spokesperson.

“As domestic vehicle production continues to increase and economies of scale gain more globally, we are making the Model 3 and Model Y even more accessible across the globe. [Europe, the Middle East and Africa]. “

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