Tesla increases Model Y/3 prices in US & China… but not by much

Tesla has increased Model Y and Model 3 prices in the US and China, after several price drops so far this year. But this time, the increase is pretty minor.

Tesla’s pricing has been on a pretty wild ride so far this year, with huge drops on all models. The most recent price drop was just four days ago, on the seven-seat Model Y option.

These drops followed a couple years of price increases, and now prices are back to approximately the same area they started, back in 2020, in most markets.

But many of these price drops have been sudden and enormous, leaving some recent customers feeling annoyed that they purchased a vehicle just before price drops of up to five figures. However, this is obviously great for new customers, and has made Tesla’s “affordable” models actually affordable again, after a few years of rather luxurious price points.

Now the needle is moving in the opposite direction… but not by much.

Tonight Tesla increased prices of the Model Y and Model 3 by, wait for it… $250. And in China prices went up by 2,000 yuan (~$289).

These price changes seem to affect just the US and China, but not other regions. We have recently seen Tesla following its US price cuts with European ones, so maybe European prices will go up soon too.

The price drops this year have led many to wonder whether Tesla is having a problem fulfilling demand. This is likely the case, but when a company is scaling production as quickly as Tesla, after a couple years of hiking prices, and in uncertain economic times (not to mention with a CEO who seems determined to turn people off…), it stands to reason that something would need to be done to stoke demand.

Tesla went a long time without having to pull any “demand levers,” and finally had to start pulling them in earnest at the start of this year with these price cuts. So far, it looks like the price cuts may not be working as well as Tesla would hope, since Tesla inventory is reaching historic highs.

But, paradoxically, this recent price hike could stimulate demand by sending a signal to customers that price cuts are over, and that now is the time to buy. After seeing so many price cuts happening almost on a weekly basis, buyers might have been holding off and waiting until they saw the bottom. This could be an attempt to Tesla to show customers that this is the bottom, and that they can go ahead and buy now.

We did see another pricing “rebound” like this after one of Tesla’s huge drops. Back in January, prices on the Model 3 & Y went down by up to $13K, then two weeks later the Model Y went up by $500.

It’s enough to make the head spin, trying to follow all these pricing changes. But let’s be honest, on a $40,000+ car, $250 isn’t going to make a huge difference. Maybe some buyers will have to pass up those all weather interior liners they had their eyes on…