The EV market feels more closely aligned to the technology markets than it does the petrol/diesel car markets. Over a long period of time, car prices inevitably go up, whereas technology gets cheaper and cheaper as volume ramps up and production techniques are improved. However, the last three years have seen big price jumps as shortages in the market have driven up the cost of important components: Is that about to change?
When the Tesla Model 3 finally arrived in the UK toward the middle of 2019, the price was just under £39,000 with the various Government grant options applied.
By the end of 2022, that baseline price had risen to £48,490. Modern EVs have a lot of electronics onboard, and the combination of new graphic card launches, updated consoles arriving in the market and a boom in cryptocurrencies – as well as many other factors – combined to drive costs up for car makers. That kind of demand for more money generally cascades down the supply chain and into the customer's pocket.
The recent drop on a new Model 3 to £42,990 is now being augmented with an additional discount if you help flush out pre-built Teslas from Musk's production pipeline.
Brand new ‘made to order' Model 3's are being scheduled for deliver in Q2., but if you click on the ‘Explore Inventory' button the UK home page, you will see cars that are ready to go.
At the time we checked, pricing on the basic spec in white started at £38,790 (slightly lower for demo models) and, if you take immediate delivery, you would also be offered a 3,000 mile credit for free Tesla Supercharging.
If you fancy a Performance version of the Tesla Model 3, then you can order from £52,290 while stocks last – with the Long Range version coming in from £45,990.
In the future, we're likely to see a number of changes here in the UK that will support EVs even more. That is likely to start in earnest with much more affordable models at some point before the end of 2025. Once the first manufacturer offers a decent-looking EV with a range over 200 miles for just over £15,000, then the rest of the market will need to realign.
Decoupling the price of gas from electricity could also create price benefits. As we move to a more sensible/localised production of electrical energy, with renewables across the land and personal generation/batteries becoming much more popular, there will be downward pressure on the price of EVs.
Lastly, you cannot overestimate just how worried the traditional car makers are about the prospect of high-spec, low-priced EVs arriving in the UK from China and other low-cost production zones around the world.
This move from Tesla feels less about ‘panic selling' and more about pushing a customer-value message.
As we reported last month, the medium-term picture for Tesla looks relatively rosy, with a huge order book for the Cybertruck and many more cars (including the Roadster) yet to be released. Should Tesla launch a new car that's closer to $25,000, then it might indeed be all over for petrol and diesel.
For now, if you were thinking about an EV, then there are clearly bargains to be had – with these additional discounts when ordering new likely to hit the price of used cars (all brands) for those who want a second-hand bargain.