Tesla cuts prices by a record £8k as Musk battles sales slowdown

Tesla has cut prices by a record £8,000 as the world’s biggest electric car maker attempts to reverse a slowdown in sales. 

The company, which is led by Elon Musk, said it would lower prices across the US and Europe by as much as 20pc, just weeks after it cut the cost of its cars in China in a move that prompted protests among buyers that had missed out on the discounts.

The UK cuts took the prices of some of Tesla’s cars to within touching distance of more affordable brands such as Skoda and Kia.

However, some buyers were angered by the changes which have left them nursing immediate losses in the value of their vehicles.

Tesla customers who have already received deliveries posted on social media saying they were considering whether to demand a refund. The cuts will be passed on to customers who are awaiting deliveries, although those who have already received their cars will have missed out on the savings.

One member of the Tesla Owners Club UK wrote on the club’s Facebook page: “I just picked up the car yesterday. What should I do? Go to Tesla and give back the car? I can't believe after a few hours from picking up the car I lost £5k."

The largest cut in price has been for the Model Y Performance, which fell by £8,000 to £59,990, while the cheapest Model Y fell £7,000 to £44,990.

Tesla’s Model 3’s long-range model fell by £6,500 to £50,990, while its entry-level variant fell  £5,500 to £42,990.

The Model 3 now costs less than rivals like the Kia EV6 and Polestar 2, while a Model Y is now just £2,000 more than the cheapest Skoda Enyaq 80, according to electric car comparison site Electrifying.com.

The drop in price came without warning and the company has not said for how long the prices will be fixed.

It marks a sharp reversal to Tesla’s strategy over the past two years when new orders outstripped supply, allowing it to charge customers a premium for the latest models.

But competition from Chinese rivals and new entrants combined with rising costs and interest rates means it has begun making more cars than it can sell.

Thomas Hayes, chairman of US private equity firm Great Hill Capital, said: “Competition is coming and they are responding with price cuts.”

Musk admitted last year that prices had become “embarrassingly high” and could hurt demand. Shares were down more than 5pc on Friday, following the worst year in history for the company’s stock as it faces fierce competition and slowing deliveries. 

Toni Sacconaghi, an analyst at Bernstein, has warned that Tesla would likely face demand challenges because its cars had become too expensive.

He said: “We believe Tesla will need to either reduce its growth targets (and run its factories below capacity) or sustain and potentially increase recent price cuts globally, pressuring margins.

“We see demand problems remaining until Tesla is able to introduce a lower priced offering in volume, which may only be in 2025.”

Meanwhile, Mr Musk, who is also Tesla’s biggest shareholder, is battling to win back the support of shareholders after he cut his stake to fund the $44bn takeover of Twitter.

It was a move which angered other shareholders who say he is spending too much time on the social media platform rather than the car company which made him the world’s richest man for most of 2022.

Tesla insisted a decline in production costs meant it could cut prices.

A Tesla spokesman 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.”