Elon Musk with a Tesla Model YElon Musk with a Tesla Model Y


Tesla slashes price of Model 3 and Y in move that will damage used prices further

  • Model 3 and Y prices dropped overnight in shock move by Tesla
  • Impact on used Tesla prices could be severe as they’re already freefalling
  • 16,000 buyers who bought at old price in December have ‘no redress’

Time 8:32 am, January 13, 2023

Tesla has slashed the price of its Model 3 and Model Y in a move that is likely to see used prices plummet even further.

Tesla has announced it has dropped the price of the Model 3 from a starting price of £51,090 to £42,990 – a near 16 per cent drop.

The Model Y Performance variant – the most expensive in the range – has dropped overnight from a starting price of £67,990 to £57,990 – a near 15 per cent price cut.

All versions of the Model 3 and Y have dropped similar levels.

Customers who ordered the car at the old price will be forced to stick with that pricing if they have confirmed an order, explained motor trade legal experts Lawgistics.

A spokesperson for Lawgistics told Car Dealer that unless Tesla offers a ‘John Lewis style price drop refund’ there is nothing customers can do unless they cancel the order under Distance Selling Regulations and join the back of the queue.

In China, there were protests after Tesla buyers missed out on similar price cuts there. Buyers are demanding compensation for the electric car manufacturer.

On the UK price drops, Tesla said 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. 

‘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.   

 ‘In the UK, Model 3 now starts from £42,990 and Model Y starts from £44,990.’

The price drop is likely to seriously affect used Tesla prices which are already in free fall.

Car Dealer reported earlier this week data from used car pricing experts Cap HPI which shows used Tesla prices are in freefall.

Top 10 biggest depreciating used EVs 2022 

Prices for used models 12 months old with 10k miles from Cap HPI

  1. Tesla Model 3 -23%
  2. Tesla Model S -22%
  3. Audi e-Tron -15%
  4. Jaguar I-Pace -14%
  5. Tesla Model X -13%
  6. Mercedes EQC -13%
  7. Smart ForFour Electric -10%
  8. Audi e-Tron Sportback -9%
  9. BMW i3 -8%
  10. Renault Zoe -8%

The Model 3 has lost 23 per cent in the last year, dropping £9,900. 

In the last three months alone the Model 3 has dropped 15 per cent, while the Model S (8.9 per cent) and Model X (four per cent) have also seen values tumble during that period.

As of this month, the cumulative loss for the last 12 months means the Model S has lost £17,916, the Model X £12,829 and the Model 3 £9,900.

The Model Y – introduced in March 2022 – has fared better over the year with values currently up 11.2 per cent over the same 12-month period. However, this latest price drop is likely to undo that performance.

Cap HPI data experts told Car Dealer this morning that they will be urgently assessing the likely impact on used Tesla values this price cut will have.

Derren Martin, director of valuations, said: ‘If it encourages buyers into a new Tesla rather than a used one, with the volumes being re-marketed there could be a further impact on used prices, which are already under considerable pressure.’

Tom Barnard, editor of Electrifying.com added: ‘This is great news for those considering buying a new or used Tesla as they are now much more affordable.

‘But if I was one of the 16,000 buyers who took delivery in the record month of December then I would be seriously upset. We saw riots in China when they dropped the price of Teslas and I am sure we’ll see angry reaction here too.

‘This is bound to cause more turbulence for used Tesla prices. It leads to uncertainty and higher finance costs.’

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James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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