Tesla has almost halved the cost of leasing its electric cars in Britain, in a bid to reverse sliding sales and shore up its market share against fast-growing Chinese competitors.
British motorists can now lease a Tesla for just over half what it cost a year ago, with monthly payments on a Model 3 starting as low as £252 plus VAT. The Model Y, launched in May and retailing for about £60,000, has also been offered at under £400 per month by some leasing firms. Last summer, the same cars typically cost £600–£700 per month to lease.
Industry sources say Tesla has been forced into ad hoc discounts of up to 40% to leasing companies — both to stay competitive and because of limited UK storage capacity for unsold stock. While retail prices remain unchanged, Tesla has added zero-interest finance deals in its stores, a move analysts say will cost the company around £6,000 over three years on a £40,000 car.
“The most expensive way to find a home for these cars is by cutting the retail price. The cheapest way is to cut the monthly payments,” said Fraser Brown, managing director at consultancy MotorVise.
Tesla’s registrations in the UK fell by 60% in July year-on-year, to just 987 units, pushing its market share down to 0.7%. In contrast, China’s BYD — a relatively new arrival in the European market — claimed 2.3% of all new UK registrations, according to Society of Motor Manufacturers and Traders (SMMT) data.
Across Europe, Tesla faces similar headwinds as Chinese brands undercut on price and flood the market with aggressively priced EVs. BYD, Nio and XPeng have all stepped up their push into the continent, capitalising on consumers’ demand for cheaper electric cars as household budgets tighten.
Despite the slide, Tesla remains dominant in the used EV market, where one in four sales is still a Tesla, according to Auto Trader. Ian Plummer, Auto Trader’s commercial director, said:
“The main thing is you can access Teslas at more affordable prices and a lease is a good way to get a more affordable EV. They are still popular and generate a lot of interest on our platform — new and used — no matter what people think of Elon Musk.”
Leasing companies have become a crucial distribution channel for Tesla as private buyers remain cautious. Cash buyers accounted for just over 27% of Tesla’s new homes market activity, while leasing plans, driven by monthly affordability, are increasingly seen as the key to maintaining volume sales.
The strategy, however, highlights the fine balance Tesla must strike between sustaining demand and protecting brand value. Deep leasing discounts may boost sales volumes in the short term but risk undermining resale values and investor confidence if they become entrenched.
With interest rates stabilising and the UK government considering new incentives to support EV adoption, the next 12 months will be critical for Tesla as it seeks to prove its long-term competitiveness against a wave of Chinese imports.
Tesla declined to comment.