Tesla changes prices for it’s Model 3 and Model Y

Is Its Cheapest Model Still Affordable? 

Following it’s trend of price increases in 2021, Tesla recently raised the price of it’s lineup of Model 3 and Model Y vehicles in a recent update. When asked, CEO Elon Musk stated the price increases were rooted in a problem that’s been plaguing many industries: supply chain issues. 

While supply chain interruptions, especially regarding the ongoing chip shortage, are certain to have an effect on automotive pricing, some have speculated that this may be a covert attempt to grow Tesla’s profits. The numbers seem to back this up: Tesla is currently sitting at a 24% increase in total gross profit in June from a gross profit of 19% this same time last year. Could Musk be using the supply chain as a smoke screen?

How Much Have the Prices Changed?

As for the price tag changes themselves, the Tesla Model 3 Standard model’s price has increased $2,000, from $39,990 to $41,990. This is Tesla’s most affordable model, and the price tags only get higher from here. For the Long Range Model 3 AWD, the price stayed at $49,990. But the Model 3 Performance increased $1,000, from $56,990 to $57,990.

The Model Y also experienced significant changes in price, with Tesla raising the cost for the cheapest version of the Model Y $2,000 as well. The model in question, the Y Long Range Dual Motor, went from $52,990 to $54,990. The pricier performance model saw an increase of $1,000, going from $60,990 to $61,990

Tesla’s Updated Online Configurator

The updates came in the form of changes to Tesla’s online configurator, a feature on their website that allows you to design your perfect vehicle. While the website doesn’t offer any high-quality aftermarket options for Model 3 Tesla wheels or Model Y Tesla wheels, it does allow customers to pick out the standard features they want on their new Tesla. 

Price increases have been a theme for Tesla in 2020. Many of the price bumps earlier in the year were smaller amounts, with the exception being a massive $10,000 increase for Tesla's Model S Plaid, a new tri-motor version of their Model S featuring a brand new battery cell. Musk also announced in June that the Model S Plaid+ would be cancelled, stating there was no need for it’s expanded 520 mile range. 

So What's Behind These Increases?

Musk maintains his stance that the increases are purely rooted in persistent issues with the supply chain. When asked, the Tesla CEO was quoted as saying “Prices [have been] increasing due to major supply chain price pressure industry-wide. Raw materials especially.” Musk went on to cite specifically issues related to the chip shortage, as the Model 3 and Model Y both use microchips to power various systems including the optional infotainment system that comes with certain models. 

Besides the supply chain and increased profits, some have speculated that these price increases are the results of a possible federal EV incentive. As it stands now Tesla owners do not have access to the $7,500 tax credit for EV ownership. But with expected reforms to the EV incentive, new Tesla buyers could be seeing tax credits totaling nearly $8,000. This expected growth in demand could easily explain the ever-increasing price tag. 

Only time will tell if these increases will cease, but if the current trend is any indication, it may be time to buy your Tesla and any accessories you want sooner rather than later.