Last week, Tesla announced a major price reduction for both the Model 3 and Model Y. Since both are popular (leasing) cars in the Netherlands, Autotelex will explain this development and how significant the RV effects are.
Tesla has had a fluctuating pricing policy for years, so far the biggest variations have been found on the more expensive Model S and X. So let’s put the price drops in perspective first:
The maximum price reductions are 12,000 on the Model Y and 7,000 on the Model 3. Not all versions of these models have been reduced in price so drastically and the Model S and X not (yet!) at all. Part of this is also compensation for price increases in 2022.
If we exclude the last price increase, it will be 4- and 5,000 euros for the Tesla Model 3, plus 3-, 6- and 10,000 for the Model Y. Then only the Long Range Model Y really stands out. And this is actually a logical adjustment in connection with the proportions within the delivery program and the comparison with the Model 3. The prices are now all reasonably aligned, at least a lot better / more logical.
Given the media coverage, it is in line with expectations that prices will not just rise again, but that is also extremely uncertain with a brand like Tesla.
Below is a table with recent new price changes for relevant electric passenger cars to the 3 & Y:
The residual value effect will mainly apply to the Model Y Longe Range, but will remain limited for the other versions. Given its previous (firm) price, the Model Y Long Range has not been sold in large volumes. Approximately 1100 registrations in The Netherlands throughout 2022, while the RWD has already had approximately 2400 registrations since its introduction at the end of September 2022 in NL.
Very young Tesla’s (2022) must adapt to the current new price level. The difference in company car tax levels between a car from 2022 and 2023 is not large in NL, so this factor does not play a role. Autotelex immediately implemented an adjustment for the residual value forecasts, which did not consider the full drop in new prices by far. This has to do with the competitive position, which will only become stronger with lower residual values, while Tesla is already very strong compared to the competition. The current offerings on Autoscout24 Netherlands are limited to 52 Model Y units, of which 50 are RWD. Due to the predominant usage goal of leasing, this will not increase quickly.
The question is how the competition will react to these price drops. A car like the Enyaq has become 8-9000 euros more expensive since its introduction at the end of 2020 (was slightly cheaper than the Model Y at the beginning of 2022, but is now considerably more expensive). So there seems to be enough room there, but production costs in Europe have risen quickly. This makes it quite unpredictable what the European competition will do. For the new Asian brands that have already set their price in Europe, it is difficult to imagine that they will already lower, but that will vary per brand. For the other Asian brands we will await their reactions.
Then there is the influence of the expected large volume of Tesla’s that will now come onto the market. That is still a bit of a guess, but Autotelex estimates that on a European scale there will not be a supply surplus of second-hand Tesla’s so quickly. Rumors from the UK are that there is much less second-hand demand, with immediate residual value pressure on electric cars, does Autotelex not expect to see in Europe. Especially in connection with the high ambitions to have everyone drive EV’s, and the major steps that many countries still must take in this regard.
So much for Autotelex’ primary response. Following a more extensive market inventor, Autotelex will come up with an update.
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