Tesla increases Model 3 and Model Y prices, cheapest car is now $42,000
by Fred Lambert
October 6, 2021
Tesla has implemented a price increase across its entire Model 3 and Model Y lineup in an overnight update to its online configurator in the US. During the first half of 2021, Tesla went on a spree of price increases across its electric vehicle lineup. The automaker literally wouldn’t go two weeks with increasing the price of its vehicles.
CEO Elon Musk said that the price increases were partly due to Tesla facing supply chain issues throughout the year, like the rest of the industry. However, Tesla’s financial results have also shown that its gross margin on its automotive business has increased throughout the year.
Tesla Model 3 Prices In an overnight update to its online configurator in the US today, Tesla increased the price of both the Model 3 Standard Range Plus and Performance.
Here are all the prices of the different versions of the Model 3: • Tesla Model 3 Standard Range Plus: price went from $39,990 to $41,990 • Tesla Model 3 Long Range AWD: price stayed at $49,990 • Tesla Model 3 Performance: price went from $56,990 to $57,990
The most significant change is obviously the $2,000 price increase to the Model 3 Standard Range Plus, which has been Tesla’s cheapest car. Earlier this year, the same version of the car was starting at just $36,990, which is a $5,000 or 13% price increase for Tesla’s cheaper vehicle over just seven months.
The Model Y was also subject to price increases with Tesla’s overnight update. Like Model 3, the cheapest version of Model Y got a $2,000 price increase and the performance version a $1,000 price increase.
Here are all the updated prices for all versions of the Model Y: • Tesla Model Y Long Range Dual Motor: price went from $52,990 to $54,990 • Tesla Model Y Performance: price went from $60,990. to $61,990 The Model Y Long Range, which is the cheapest version of the electric SUV, has now seen $4,000 in price increases since April.
Electrek‘s take Most of Tesla’s price increases throughout the year were smaller $1,000 or $500 increases, but they added up to significant amounts. Combined with this $2,000 price bump for the base versions, we are now talking about Tesla making its vehicles significantly more expensive in the US.
Musk has been claiming that the supply chain issues have complicated things and increased costs, which might be true, but Tesla also went from a gross profit of 19% at the end of last year to 24% in June after the first wave of price increases. So Tesla is also definitely making more money on its vehicles.
Some have speculated that those price increases in the US are to slowly increase prices in anticipation of the new federal EV incentive. Tesla has been leading the US EV market for years despite its buyers not having access to the $7,500 tax credit anymore.
A reform of the federal EV incentive is expected to pass by the end of the year, and it could give Tesla buyers up to $8,000 in direct discounts in the US. Since demand has not been an issue for Tesla in the US, the automaker could be looking into taking the opportunity to increase its gross margin to finance its growth.