It just became a tad more expensive to step inside a new Tesla, as the automaker increased prices last week on its lower end models. Tesla has a history of rapid price changes and these latest moves fit the pattern. The company has shifted pricing across its lineup about a half dozen times since February, but the latest price hike is the third jump in prices for Tesla’s budget-friendly Model 3 in the last month.
Tesla continues to dominate the EV space, having sold 500,000 vehicles in 2020. On the heels of that success, the company has seen its market cap breeze past more established U.S. automakers like GM and Ford. However, Tesla still has a lot to prove. Competitors are expected to release a tidal wave of new electric vehicles in the next several years, and all taking direct aim at Tesla’s market share. While the company’s first four models have been unequivocal successes, it is expected that the company needs to continue broadening its lineup. On that front, Tesla has a roadster, semi and pickup all in development.
In its latest pricing move, Tesla increased—albeit modestly—the cost of its entry level Model 3 sedan and entry level Model Y SUV by $500, according to Electrek. The base Model 3 now retails for $38,990, while the asking price on the base Model Y is $50,990. The company doesn’t share details on its pricing moves, but there a number of factors that seem to be at play. Demand always will play a significant role in cost, and demand continues to be high for Tesla’s products. Supply chain shortages on components—chips and battery parts in particular—could be increasing costs that are bubbling up to the vehicles themselves. The report of money for EV buyer rebates in the Biden infrastructure plan could also mean Tesla feels it can once again get more creative when pricing its vehicles.
Then there’s also the specter of Tesla’s future product plans. While the most affordable Tesla in the lineup today is a Model 3 that sells for nearly $40,000, a sub-$25,000 car is on the way. The car will be able to achieve that price thanks to next-generation battery technology, according to Musk. More recently, there have been indications that the more affordable electric could begin rolling off the assembly line in China by the end of 2022. Either way, if someone is a true budget buyer, this is the Tesla move they’re waiting on.
Tesla’s pricing changes are nominal at best. Five-hundred-dollars up or down isn’t going to win or lose Tesla customers. However, if there’s one thing many know from watching Musk and company, nothing happens by accident. The Tesla community will want to keep a close eye on the company’s moves over the next several months to see if something larger is in the works.
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