Tesla owners who saw the price of their expensive electric cars slashed by up to £9,000 just days after taking delivery will not be compensated.
An email seen by This is Money sent from Tesla to an owner who had a new car that arrived in December and it is now priced £4,000 lower than what they paid last month says the company ‘will not be taking any initiative to reimburse customers who found that the price of similar Teslas decreased following their own delivery’.
A week ago (Friday 13 January), Tesla confirmed it had cut the price of its Model 3 and Model Y with immediate effect, leaving 16,000 customers seething having collected the same cars at a higher cost in December.
Some accused Tesla of ‘duping’ them into taking delivery earlier than arranged in an effort to process sales ahead of the surprise price adjustment.
Many have called for compensation from Tesla but instead will be hung out to dry by the US firm, with cars now worth far less than they paid for them.
Hung out to dry: Tesla customers who took delivery of cars days before the US brand slashed their prices by up to £9,100 will not be compensated financially or with complementary charging and upgrades, an email seen by This is Money confirms
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On the back of last week’s shock price cuts, This is Money has asked the US brand about remuneration for hard-done-by December customers but has been told by a spokesperson that ‘there are no comments on this from Tesla’.
Yet, Tesla’s Customer Resolutions UK & Ireland department has been replying to owners who have been in touch demanding redress.
And the company line given has ruled out any form of reimbursement.
The Tesla email sent to a December customer – which has been shared with us – states: ‘We are continuously working to make our products more accessible to prospective owners with our vehicle pricing, which varies based on a multitude of factors.
‘We acknowledge that the vehicle you purchased is more affordable today than when you purchased it, but we can assure you the value available to you at point of sale was the best value available to you and all equivalent customers at your time of purchase.’
In response to calls for compensation, the email says: ‘Tesla will not be taking any initiative to reimburse customers who found that the price of similar Tesla’s decreased following their own delivery.
‘At this time, there are no further routes for escalation.’
When we asked Tesla UK to confirm the message issued in the email to one of its customers, it said it has ‘no comment’.
The reader who provided the email to This is Money said: ‘[This] has made me think about what I mean to Tesla. I can’t see the benefit in alienating this cohort of customers.’
As for customers who have ordered Teslas at the higher price but their vehicles have not yet arrived at UK ports, Autocar last week said a brand spokesperson had told them all undelivered cars will have their pricing updated automatically to reflect the changes announced on Friday, provided that the original fee is higher.
Seething: A number of customers who have owned their expensive Tesla electric cars for just a matter of weeks said they believe they were ‘duped’ by the company into taking early delivery in December before the brand slashed its pricing
The Model Y SUV was slashed by as much as £9,100, while the company knocked up to £8,100 off the price of a new Model 3 (pictured), according to Electrifying.com
Price cus send monthly finance payments on new Tesla EVs soaring
Tesla’s controversial decision to slash the price of its cars last Friday has led to monthly repayments for new customers buying on finance sky-rocketing by 57% a month.
Between the day the announcement was made (13 January) and 17 January, monthly repayments on a Tesla Model Y were £466 for a customer putting down a £6,000 deposit and driving 10,000 miles a year for 36 months. This made it £1 cheaper per month on finance than the cheapest Vauxhall Corsa Electric and less than cars such as the MG 5 EV.
However, finance experts and lenders have made a rigorous readjustment of the expected future resale value of Teslas as a result of the sudden price cuts and nosediving second-hand prices.
This has led to a huge increase in finance repayment costs.
According to the company’s own online calculator, the Final Payment on a Model Y at the end of the agreement with the terms above has plunged from £29,286 on the morning of 17 January to £18,466 today (20 January) – a fall of 37%.
This has meant the customer’s repayments now have to cover this shortfall, and the monthly cost has risen 57 per cent from £466 to £733.
Electrifying.com’s Ginny Buckley said: ‘Initially, last week’s price cuts were good news for buyers, however the move has clearly had a huge impact on Tesla’s future values.
‘This is evident by the sudden increase in costs for people buying their car on finance.
‘While the finance payment is now less than it was last year, the amount a buyer will save over the duration of a three-year agreement is much lower than the cut to the list price would suggest.
‘The pricing rollercoaster is bound to have had a negative impact on the faith people have in Tesla as a brand. Car makers will usually carefully manage prices and incentives to avoid crashing their used values and upsetting customers; Tesla’s approach makes it difficult for leasing companies to predict how residual values may look at the end of the finance term.’
Tesla confirmed a week ago Friday that it had cut the price of the Model 3 and Model Y in the UK and across markets in Europe and the US.
The Model Y SUV was slashed by as much as £9,100, while the company knocked up to £8,100 off the price of a new Model 3, according to Electrifying.com.
Tesla UK 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.
‘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 [Europe, the Middle East and Africa].’
Industry insiders were quick cast aspersion on Tesla’s claims, suggesting the price cuts were more likely in response to a drop in appetite and the brand ‘doubling down’ on a discount drive it started in Asia as demand slowed against the backdrop of a weakening economy.
The Elon Musk-led company missed its target in 2022 to grow deliveries by 50 per cent annually and reported that sales of its China-made cars hit a five-month low in December, underlining the hit from rising interest rates and growing recession fears.
The decision has infuriated many of the 16,368 UK owners who took delivery of cars from the middle of last month – 10,664 Model Y SUVs and the remaining 5,704 Model 3 saloons.
After reporting the news on Friday, This is Money has been contacted by a large number of these disgruntled Tesla customers.
Many, with their blood boiling at the knowledge they’ve been charged thousands of pounds more for their cars than new customers will pay today and the knowledge their used value has been slashed, have emailed the company and dealers making demands for redress.
It’s a far cry from the reaction in China days earlier. The price cuts there ignited a mob-like response from recent owners, hundreds of whom stormed showrooms across the country to vent their frustration at the auto maker.
Protesters gather at a Tesla showroom in Chengdu, Sichuan, China, on 6 January after the brand announced huge price reductions on its new cars in the country
Crowds also gathered inside the showroom in Chengdu. Demonstrators slammed the sudden discounts of the Tesla Model Y and Model 3, claiming they had missed out on the price cuts
What legal rights do Tesla customers have?
With many Tesla customers who received cars in December seeing the price of their cars slashed just a matter of weeks after they took delivery, some have asked what legal rights they have to reject their vehicles.
Joel Combes is the managing director at motor trade legal firm Lawgistics. He told us: ‘There is no direct legal argument for customers to be refunded unless Tesla offer a John Lewis type “price drop refund” policy, however I suspect that many Tesla sales will be distance sales and the right to cancel will apply.
‘Some would say that new Teslas will be made to the specific customer order and therefore will be deemed as bespoke goods and exempt.
‘This specific issue has not been determined in court, but I suspect that the right to cancel will apply.’
The Business Companion, which is backed by the Department Business Energy & Industrial Strategy, states that ‘this exemption does not apply to items made to a customer’s specification simply by combining stock items – for example, a computer put together from stocked parts or a car ordered from a fixed menu of items’.
Joel told us: ‘If cancelling under the distance sale rules, the customer can simply change his mind, does not have to provide any reason, and the Tesla price drop will be a perfectly acceptable ground.
‘The 14 days’ cancellation window starts to run from the point of delivery.
‘The trader is required to provide prescribed details in distance sales to the consumer, which have to include the cancellation rights and a sample notice to cancel has to be given or made available to the consumer.
‘The consumer does not have to use this notice, a clear statement of the decision to cancel is sufficient.
‘If the trader does not provide the prescribed right to cancel details, then the right to cancel is extended by 1 year, no deduction may be made for use and the trader will be liable for the cost of the return.
‘I also suspect that many Teslas are purchased on finance, in which case the finance provider will act as the trader, the above right to cancel will still apply and the consumer will have the option of complaining to the Financial Ombudsman Service, for which no fee is charged, if the finance provider refuses to cancel the deal.’
‘We’ve been duped,’ Tesla customers say
This is Money has received a barrage of emails from annoyed, frustrated and furious Tesla customers since Friday.
The price adjustment comes as a double-blow to them following our report earlier this month that the second-hand values of Teslas have fall by as much as £18,000 in the last year.
All communications we’ve received are from customers who took delivery last month – meaning they missed out on the slashed prices by just a matter of days.
A number said they felt they’d been ‘duped’ into collecting their vehicles early, having been offered free access to Tesla’s Supercharging network if they accepted their cars in December, just weeks before the prices were adjusted down.
This is Money has received a flood of emails from December customers who are understandably upset by Tesla’s recent price cuts, having paid up to £9,000 more for the same cars just weeks ago
One of these Tesla owners is Sean Creighton, who told us: ‘I was pushed to take early delivery of my Model Y Performance on 23 December. The offer of 10,000 kilometres [6,214 miles] of free supercharging being another enticement.
‘I am enormously disappointed that after just three weeks of ownership the price has reduced by £7,000.’
Mr Creighton adds that his car arrived without parking sensors despite opting to have them on his Model Y when it was ordered.
Tesla announced in October 2022 an update across the range that would see the removal of ultrasonic sensors on both Model 3 and Model Y vehicles. These help to power both the automated parking system as well as the Autopilot assisted driving features.
How much has Tesla slashed its car prices in different markets?
Tesla cut prices for all versions of its Model 3 and Model Y cars in China by between 6.0 per cent and 13.5 per cent, according to calculations by Reuters based on the prices shown on its website.
The starting price for Model 3, for instance, was cut to 229,900 yuan ($33,427) from 265,900 yuan.
The latest cut in China, along with a price cut in October and incentives extended to Chinese buyers over the past three months, mean a 13% to 24% reduction in Tesla’s prices from September in its second-largest market after the United States, according to Reuters’ calculations.
Tesla cut the prices of Model 3 and Model Y cars by about 10 per cent each in the country, the first time it had done so since 2021. The price for the Model 3 rear-wheel drive version is now 5.369million yen ($40,091), down from 5.964million yen.
Tesla’s price cuts in the country differed from model to model, but ranged from about 6million won to 10million won ($4,725 to $7,875), a local Tesla sales official said.
The price of Tesla’s basic Model 3 rear-wheel drive vehicle was listed as 64.34 million won ($50,637) on the company’s website on Friday. Its Model Y Long Range sports utility vehicle was 84.999million won.
Tesla’s US price cuts on its global top-sellers the Model 3 sedan and Model Y crossover SUV, were between 6 per cent and 20 per cent, Reuters calculations showed.
The basic version of its Model Y now costs $52,990, down from $65,990 previously. The company also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States.
Tesla cut prices on the Model 3 and the Model Y by about 1% to almost 17% depending on the configuration.
Customers buying the Model 3 for €44,990 ($48,638.69) will now get a further price reduction through a government subsidy of €5,000. The upper limit for the EV scheme is €47,000.
Tesla promised a software update that would provide distance alerts using just the camera software, though this still remains unavailable today.
Mr Creighton said: ‘The update to use the cameras – called Tesla Vision – has not happened.
‘I paid for full autonomous self-driving and quite a number of the features with it do not work. That’s not what I expect from a car I paid £76,000 for!
‘After just three weeks I have lost all faith in Tesla as a brand.
‘I can only think that Tesla doesn’t care about past customers ever buying again.’
Another owner emailed to say they had been ‘duped into paying more’ for a Tesla last month: ‘I got my car in the middle of December; I am now feeling angry and gutted to see this [reduced] price just after a month,’ they said.
‘I am very disappointed by this dirty trick from a brand like Tesla. On top of that I can’t use the auto-park to safely park my car and I was not told that this feature will not work.
‘Even if Tesla doesn’t refund the price difference, they should offer free supercharging miles for the next five years and provide free upgrade to full self-driving software.’
Some emails we received got straight to the point about how disappointed customers feel.
‘Took delivery of my Model Y Performance on 22 December. Paid £70,000,’ one read.
‘No parking sensors and no timescale to replace with Tesla Vision.
‘And now a few days later they’ve knocked £10,000 off the price.
‘Criminal, disgusting, despicable.
‘Lost all faith in Tesla.
‘Must come up with some serious compensation.
‘To do all this with no advance warning is not on.’
One reader who contacted us over the weekend said he had been ‘forced’ to take early delivery of his wife’s Tesla on Christmas Eve, with the offer of 6,000 free supercharger miles as part of the deal as a ‘little sweetener’.
He now believes they’ve lost thousands of pounds due to the January price cut, which he says the company ‘obviously knew about’ but had ‘kept hidden’.
‘As far as I’m concerned this is pure and simple theft – it was premeditated and I would like to join in any class action in legal action against Tesla to recover my money and compensation,’ he added.
Siddhant Kumar also got in touch with This is Money having read our story on Friday.
‘I took delivery of a Model Y Long Range on 10 December. At first I found out that, had I delayed the delivery to 15 December, I would have been given 6,000 miles of free Supercharging…and then I discovered that if I had delayed to January the price would have dropped £5,000 for the same car,’ he explained to us.
‘Not only is this disappointing, to make matters worse I had to take the car for a service in the first month of use because of a steering vibration at 65mph. The issue is unresolved and seems to be related to the general lack of quality of the car. It was also a shocker to see no parking sensors.
‘Overall, [I feel] quite let down on a very expensive purchase and [there is] nothing I can do about it.’
Many of the owners who have been in touch also took issue with Tesla’s removal of parking sensors from their cars, which not only provide an alert when they are getting closer to objects but power the Autopilot and self-park features they paid extra for
Another reader – who requested to not be named in this story – said they took delivery of a Model Y Performance SUV on 22 December, having been told it would not be arriving until the first quarter of this year.
The customer requested to their Tesla dealer that they would like to delay the vehicle’s registration until 1 March 2023 in order to have the new ’23’ number plate.
‘They said that would not be a problem,’ the Tesla owner explained. ‘I was then advised my car would be available in December and I had to pick it up by 30 December. I was told I could not wait till January, else I would lose the car and my £200 deposit.
‘I asked if this was due to a Q4 sales push but they said it was not – maybe it was more to do with the January price drop. I had to take a break from my Christmas holiday to go pick it up.
‘On receipt of the car I was told it had no parking sensors, and the functions available under Enhanced Autopilot had been disabled – I paid £3,400 [extra] for this option.
‘I was told a software update was due before end 2022 to fix this – I am still waiting and no one at Tesla will commit to when this will be re-enabled.
‘I am a long standing Tesla customer but service levels over the last two years have plummeted.’
What a consumer rights expert says about Tesla customers’ options
We spoke to Scott Dixon, a consumer and motoring disputes expert who run the website The Complaints Resolver, about his advice for Tesla customers as a result of the price cuts.
He told us: ‘If you have taken delivery in December and paid cash, you’re stuck unfortunately.
‘However, for those who used finance there is a 14-day cooling off period, which would apply if you took delivery in that time and decided to cancel the agreement.’
As for those who ordered their cars in December at the higher prices but have yet to take delivery, Scott says there is protection for you.
‘The Consumer Contracts Regulations 2013 applies to online orders. This is often referred to as ‘distance selling’ regulations,’ he explains.
‘You have the right to cancel or return your vehicle from the moment you place your order until 14 days after it has been delivered so long as the entire buying process was completed online and you didn’t have opportunity to see or discuss the goods or services in person.
‘As the customer has yet to take delivery of the car, it cannot be said that they have had the opportunity to inspect it and conclude the purchase and contract.
‘As for deposit refunds, it’s likely that they would lose a deposit as that is a commitment made by the customer to buy the car – you would need to read the T&Cs within the agreement on that.
‘It’s worth noting that key terms of a contract agreement need to be clear, prominent, fair and transparent – they cannot be buried in the small print.
‘Section 62 of the Consumer Rights Act (CRA) 2015 states that an unfair term or notice is not binding on the consumer and section 68 of the CRA has a requirement for transparency.
‘Consumers can challenge withholding deposits on that basis, but it is tricky and dealerships won’t make it easy for you to uphold it for obvious reasons.’
And the emails we received over the course of the weekend didn’t end there.
David Shimmons wrote to us to say he had ordered his Tesla Model Y Long Range at the end of August and was told the car would not be available until around March 2023. However, it was delivered on 12 December.
David said he is ‘very angry’ because he has missed out on both the price cut in January and the free charging package given to other buyers who collected their cars last month.
‘On 19 December I received a message saying cars delivered after 15 December [would receive] free 6,000 mile Supercharging! Therefore, [I] missed out on this very lucrative offer by three days! Phoned Tesla to complain, received no satisfactory answer.
‘Having now received the news of the massive discount now available on new orders I feel very angry at the way Tesla are treating their customers!
‘Had Tesla kept to the original delivery dates I would not be in this position. I feel that Tesla should compensate all customers in this position with cash and free supercharger use.’
He added: ‘On original order I assumed the car was going to be delivered as per the specification, including parking sensors.
‘[I] was somewhat surprised to find these missing on collection of the car. At no time did Tesla inform me that the spec had been downgraded, assume this is a major cost saving!’
David says that he wanted to point out that he is ‘very happy with the performance of the car’ but disappointed that ‘Tesla is not being fairer to its customers’.
One email from a reader called Jay C simply said: ‘I’m another one that’s been ripped off by Tesla. I took delivery on 21 December and now find out it’s worth £10k less.
‘I’m gutted. How can they get away with it?’
Another customer who asked not to be named in our story, said they purchased their Tesla at the end of November and took collection just days later on 3 December.
They told us that they are very unhappy as they had been holding out until Tesla had resolved an administration error, which saw their car being quoted as producing more power than it does.
The error means the car is subject to higher insurance premiums, which they were waiting to be resolved before triggering their finance deal.
‘I had the finance agreed for 60 days, which I was more than happy to wait for until the insurance was resolved. But a salesman from Tesla called and said if you don’t pay for the car today you might not get another one within the 60-day window, which was a lie because there were plenty in inventory,’ they explained.
‘This led me to purchase the car and take delivery on 3 December.
‘I was also told I would have roughly £10,000 in equity when I sell the car in three years’ time which is what led me away from lease and onto PCP [Personal Contract Purchase finance].
‘But after the price dropped by £8,000 my car is now £15,000 in negative equity after just one month of ownership.
‘I think they should either refund all 16,000 customers who purchased the car in December or the last quarter because I know for a fact most have lost all faith with Tesla and that’s 16,000 customers who will never buy a Tesla again.’
Another disgruntled customer who blasted Tesla for the price cuts said owners who took delivery of their electric cars over the course of the last few weeks should be offered a number of benefits.
This includes a voucher for the value of the overpayment that can be used against the order of another Tesla car.
They also called for December customers to be given a free home wall charger – something Mini Electric customers currently benefit from – or a permanent Supercharger 50 per cent discount.
‘Tesla cars have held their value very well until this. If that was part of your thinking when you bought Musk has damaged that forever. He should be forced to compensate for that too. Not necessarily with cash but with value,’ they told us.
Price cuts a ‘double blow’ for December customers with used Tesla values are in freefall
Last week’s price reductions are a double-blow to those who took delivery of Teslas in recent months who are already seeing the value of their cars going into freefall.
According to data supplied to us by motor valuations businesses Cap HPI, a one-year-old Model 3 with 10,000 miles on the clock today is worth £36,300.
Some 12 months ago, a Model 3 would have been valued at £46,200. That amounts to a total loss of 21.4%, which is £9,400.
Second-hand Model S saloons have seen a similar level of value decline, falling £17,916 on average in the last year, down from £87,266 in January 2022 to £69,350 today – a drop off of 20.5%.
The Model X is also down 12.9%, which translated to a financial loss of £12,829.
Analysts believe cheaper taxation of new EVs, rising charging costs and petrol and diesel pump prices falling are all having an impact on the value of second-hand electric cars.
Cap HPI, which tracks the value of second-hand cars, told This is Money that January is the fourth consecutive month that used electric car prices have generally been in reverse.