I’ve written several articles on Tesla after buying a Model 3 in 2018.
Shortly after I got the car, Tesla accidentally handed over full control over their forums to me, which made national news headlines.
I wrote about my thoughts on the car after 2 years here. Incredibly, I can still flip my 4 year old car for nearly $46,000, which is what Tesla was charging for my long range Model 3 before they raised prices over the past year.
I can’t say I’m thrilled about the direction of the car over the past several months. The V11 software update made everything far less intuitive and more difficult to use. I was frustrated enough to file a NHTSA safety complaint about the update as it means having to scroll through menus while driving for simple tasks that used to be doable on the home screen. It’s the first time Tesla made a software update that I wanted to roll back, as their previous software updates have been incredible.
I also don’t like that I paid $3,000 for full self driving, but can’t have access to the full self driving beta as Tesla doesn’t deem my driving to be safe enough according to their ridiculous algorithm. Driving perfectly how Tesla wants you to drive takes much of the fun out of the car and is frankly dangerous. They don’t want you to ever use the brake, rather to rely only on regenerative braking. It’s ridiculous to be penalized for when you just have to brake. Full self driving now costs an outrageous $12,000 (!) and there’s not a chance it’s worth anything close to that with its current features and limitations. The autopilot that is included for free is more than good enough.
It seemed like there would be an opportunity for NJ residents to get a Model 3 for just $22K-$27K last September, but that fell through when the Build Back Better plan failed to pass the Senate. I wrote then that I expected the price of a Tesla to go up and indeed, those that reserved a Tesla then did well, as the cost of a Tesla has skyrocketed since then. People with reservations have been able to sell them on the grey market for a very healthy profit.
Here is a look at how much Teslas have gone up over the past year:
- Model 3 Standard Range: Was $35,000, now no longer available for sale.
- Model 3 Standard Range+: Was $37,990, now $46,990. Increase of $9K/23.7%.
- Model 3 Long Range: Was $46,990, now $54,490. Increase of $7.5K/16%.
- Model 3 Performance: Was $54,990, now $61,990. Increase of $7K/12.7%.
- Model Y Standard Range: Was $41,990, now no longer available for sale.
- Model Y Long Range: Was $49,990, now $62,990. Increase of $13K/26%.
- Model Y Performance: Was $59,990, now $67,990. Increase of $8K/13.3%.
- Model S Long Range: Was $79,990, now $99,990. Increase of $20K/25%.
- Model S Plaid: Was $119,990, now $135,990. Increase of $16K/13.3%.
- Model X Long Range: Was $89,990, now $114,990. Increase of $25K/27.8%.
- Model X Plaid: Was $119,990, now $138,990. Increase of $19K/15.8%.
Those are some pretty impressive price increases.
Elon Musk says that Tesla is facing significant inflation, and there’s no doubt that’s the case, though these numbers far outpace inflation.
In addition to inflation, Tesla likely increased pricing in order to capture extra dollars from people pre-emptively ordering cars in hopes of a federal rebate. That didn’t happen, but instead gas prices spiraled out of control, which has incentivized electric cars without the government providing a direct rebate. That demand has allowed Tesla to continuously raise prices with no end in sight, not unlike Disney theme parks. As long as the demand is there to create a months long backlog of cars, there is no reason that Tesla can’t keep asking for more money for their cars.
If it looks like a federal rebate on electric cars will be revived, I’d guess that Tesla will be able to increase prices that much higher to capture that rebate for themselves.
It will take some serious competition or other external factors to get Tesla pricing to come back down again.
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76 Comments On "Thoughts On Tesla’s Skyrocketing Prices"
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If people are willing to pay, keep raising prices.
– A Tesla shareholder and owner
Tesla cars are fugly except Model S
Yep, Long live Elona! 😉
Lol.
It’s interesting. When Tesla’s prices went down, people complained about having paid more when they bought theirs, now prices go up, people complain about having to pay more now.
I don’t think their pricing is due to “what the market will bear” or hedging against a possible government rebate. I think, like every other industry, their costs have gone up. Nickel and Lithium have gone up, and I’m sure chip manufacturers are charging more as well.
What we don’t see here, is the dealerships gouging an extra 10 – 20k above MSRP as we see with the legacy automakers. So much for the poor dealers needing to fight to keep legislation requiring their services to “protect the consumer”.
In my opinion, they offer a decent product at a decent price, and if it weren’t for them, we wouldn’t have any EVs on the market – they lit the fire under the legacy automakers.
Prices went down last time according to the drop in the federal rebate…
If it was solely due to inflation then the price increases would be more uniform and not 12%-28%. The nickel and lithium pricing doesn’t vary like that between trims.
I don’t see any argument for why it’s not pricing at what the market will bear, which is what the pricing model is nearly every product out there.
But yes, it’s refreshing not to haggle with dealerships and to be able to get a quality EV.
your post implies gouging (at least to me, whether you meant to or not i can’t say) – this isn’t gouging. And if you look at raw materials, crude increases don’t match the doubling of unleaded.
Battery size varies, and the upper end (e.g. plaid) trips already had some price cushion in play – they held back on those increases to be competitive – perhaps even to drive people to those trims, as they now seem like a deal.
Lol they don’t have to charge over 10k over msrp because they can just raise the msrp whenever they want overnight
True. This ain’t Ford.
The problem is that the serious competitors that are starting to come to market (i.e. Ford Mach E, Hyundai Ioniq 5, Kia EV6) are also capacity restrained and sold out everywhere and selling for well over MSRP.
But not 20% above msrp. And those markups are the fault of dealers not manufacturers passing on increases in excess of inflation
Indeed. That’s the difference between the Tesla direct sale model and the dealership model.
Yup. Tesla can be even more of a ‘jerk’ than car dealers, one of the most hated industries!
Te$la vs stealerships!
No such thing as a serious competitor
Have you ever heard of the word Fanboy?
on every thread where anyone argues with someone who doesn’t like tesla
Tesla still the best car I’ve owned and live autopilot for long drives. I own an 2017 model X and a 2017 model 3 with another X on order that I have been waiting on which is now showing it should be ready in July. I also have an order for the cybertruck. If someone doesn’t like any particular car they have now is the time to sell it’s a sellers market. Tesla is offering me just under $70k for my model X as a trade in.
Just like gas is going up Electric energy prices are up 300% so home charging is getting costly as well.
I haven’t seen increases anything like that.
Reader is talking about Ukraine electricity cost….very expensive
I haven’t seen much increase in electric cost. I think ours went up from 11.7 cents/kWh to 12.3 cents/kWh this year.
What I know for sure is that my previous 4-door ICE sedan got about 50 miles from $10 of gasoline, and my equivalent 4-door EV sedan gets about 250 miles from $10 of electricity. And the old ICE 4-door sedan needed to be replaced anyway.
Interestingly enough, about 2 weeks after taking delivery of our Tesla, we bought a second used EV.
No one is forcing you to pay for FSD or to try to aim for a high safety score. Complaining about it is silly. They only expect ~10-15% adoption rates for FSD right now and the value proposition is one of long term value, not today. The value of FSD (in time) will be multiples of current price. Think of this hollow FSD package as a placeholder with commensurate pricing.
FSD is in beta and it’s expected after version 11 rolls out they’ll reduce the safety score to 95 just FYI. All of this is BETA so it’s important to understand it’s a moving target.
As far as why prices were raised (beyond inflation) it’s twofold:
1 – demand is far outpacing supply, 6-18 month wait times currently. Increasing price reduces demand to a reasonable wait time. Can’t afford it? Too bad, that’s life. Similar to your point on Disney – no one is owed a trip or a car if the market will support higher prices.
2 – commodities such as lithium and nickel are jumping in cost. You won’t find these to be included in any CPI report as far as inflation is concerned. Because Tesla locks in your reservation price they must offset current and future reservations at a higher price point to deal with skyrocketing costs of battery metals.
Also, I don’t think this has anything to do with a Federal rebate. Elon Musk has stated he’s for doing away with any incentives or new packages to prevent further inflationary pressure.
I hope this comment is approved because it’s important for people who aren’t in the loop with Tesla and EVs to understand what’s going on in today’s market and with FSD as a whole.
As an engineer, I don’t think a single car that is on the road today will ever be truly full self driving. The definition of full self driving is when I can send my kids in the car to school and the car will drive back to my house itself. The reason I say that is because I suspect that there is no car on the road today with sufficient processing power to be able to do it safely enough.
As an engineer, I don’t think SD will be a thing unless all cars are using it and communicating with each other – just too many unknowns and the speed at which things can change, and the limited number of execution paths (2 dimensions only, and must stay on the road). I’ve been surprised by revolutionary advancements in the past, so here’s to hoping…
Level 5 automated driving will take a whole lot of expensive tech in each car, mostly to reliably deal with objects on the roadway that are not vehicles (pedestrians, bicyclists, animals, etc.). This will most likely be federally regulated, as Tesla is stubbornly holding on to 2-D visual recognition for FSD (I cannot call this “Full Self Driving” because it is not, and is nowhere close to being such…very much similar to using KFC instead of Kentucky Fried Chicken). The current White House admin cannot stand Tesla, and can use this to really put a dent in FSD’s future.
L5 automation will also require a massive investment into the infrastructure of the roadways across the US from all parties involved (OEMs too) to be able to coordinate all of the vehicles on one communication system.
We’re looking at closer to 2040-2050 to have the tech truly ready to go, and it will slowly phase out cars with steering wheels over the next 20-40 years after that.
By then, cars will most likely shift into a MaaS (Mobility as a Service), AaaS (Automobile as a Service), or TaaS (Transportation as a Service), where individual people no longer own cars and simply hail rides everywhere (a la Elon’s “robotaxis”).
Also, who knows if BEVs will still be relevant, as other propulsion technologies will be further developed and more widely available…especially if there is a government investment in things like hydrogen processing and fueling stations around the country. Electricity off the grid is simply too unreliable to use for every vehicle on the road in the long-term future.
I paid for FSD in 2018 based on promises that within a year it would be able to drive me across the country. So, why can’t I complain about that? It’s still not worth $12,000 now and I’ll be surprised if it ever is without superior hardware.
I don’t have a problem with prices matching demand. But a federal rebate certainly is a factor, as the price dropped in the past nearly exactly the amount of the rebate being phased out.
They went from lidar/radar + vision to now pure vision to remove real-time conflicts between sensors; they’ve moved on to pure vision, same as humans.
This change definitely caused delays, no doubt about it. But as the Nintendo founder once said “A delayed game is eventually good, a bad game is bad forever.” In this case we’re talking about what is the vision based operating system for general use AI. It’s going to take time and there’s not going to be a smooth path.
That said we all know Elon operates on Elon time; he and his team will get the job done even if it takes longer more often than not; comes with the territory of setting unprecedented goals. Both a feature and a flaw in disruptive innovation.
Perhaps they initially were front running the rebate but again, I find it highly unlikely that even if it were true it’s not the sole reason. By in large input costs and demand are the two key levers that set price. In this case a tax credit would cause demand to spike further which doesn’t create positive sentiment with people already having to wait 6+ months.
I love how everyone says “The value of FSD is long term, not today”.
That is true, but keep in mind FSD is attached to the car, not the owner. So if your car gets totaled or you want to upgrade when the technology is ready, you will need to pay for it all over again. And the market may not love a tesla w 100k miles then as much as it does now.
Tesla’s have bucked the trend as far as vehicles being a depreciating asset. Look back before covid and you’ll see the same trend. This will be the case for a few years as we’re still only ~6% EV global adoption.
Their batteries are rated for 1 million miles and degredation tests have confirmed such. Furthermore, there’s less moving parts, fluids etc which inevitably means less points of failure. The best part is no part. This is why the old cars with no power steering/brakes or tech seemed to last forever as an unpleasant but reliable way to get from point A to point B.
In the future Tesla will gain more value owning/leasing fleets and gain far more than $100k value per life of the vehicle. Obviously years away for various reasons, regulation being a big one. But the point is Tesla doesn’t actually need nor care to provide lower price points/ friendly incentives for FSD ownership/subscription. Y’all are data collectors to feed into the NN for further edge case learning.
Natural degradation isn’t the only thing that would cause a tesla to total or to significantly depreciate. I know several people who have totaled their tesla for what would have been a minor to moderate accident on an ICE. But since the battery was damaged, the car was totaled. Also, if hardware significantly improves older models may be undesirable. This is one of the reasons why teslas are more expensive to insure in general than ICE of similar MSRP. It’s very possible that tesla realizes Level 3+ autonomy requires better hardware especially in poor conditions, for example. Battery breakthroughs (e.g., 4680) may improve ranges significantly on new models.
Yes, the battery pack being designed as part of the structure will cause higher costs of repair (or being totalled). Have to ask yourself though which do you prefer? Highest rated safety (Tesla) or less safe but potentially costs less to repair? Also note: very hard to roll a Tesla.
All cars (insert any tech) age and lose value as new tech end improvents are made. How is this unique to Tesla?
Tesla offers insurance in many states and they fully intend to offer it everywhere. I’ve personally watched $160/mo get dropped to $70. Tesla has accurate data. Also note: safer cars reduce premium.
IIRC 2017+ models are equipped with necessary hardware for FSD. Again, newer cars means latest and greatest technology. Because it’s a vision only system lidar/radar isn’t needed so that also reduces minimum requirements for FSD.
The range of Tesla vehicles are designed to meet 95%+ consumers needs when it comes to range. They’re also growing their charging network as fast as humanly possible (they have more cash than they know what to do with). Most people charge at home anyways.
The 4680 tabless design indeed increases performance/range (and costs less to produce). That said they’ll use LFP batteries in most non-performance vehicles because of constraints with battery metals (supply chain + cost).
Back to your main point though. Tesla’s do not depreciate nearly as fast as ICE vehicles. You can search for yourself. In many cases they’re selling for above new because of supply and demand (wait times for standard model Y is 2023 Jan now). Tesla is nearly doubling production on yearly basis and still can’t keep up with demand. Not to mention global market penetration is less than 4% for bEVs.
On another note when you compare total cost of ownership it’s not even close, Tesla (and EVs in general) cost far less to maintain.
Back to the Nissan Altima
Lol, I can’t imagine ever going back to an ICE car. I’m just waiting to see who will have the first EV minivan and hoping 9 year old Odyssey will hold out for it.
Rivian or the VW ID.Buzz are the closest things. But Id be shocked if a traditional minivan will come by 2026.
Isn’t Chrysler also releasing a Pacifica EV soon? Also Hyundai is considering an EV Staria and also considering bringing it to the US market.
Pacifica lol.
Have a 2015 Honda Odyssey and three young kids, I won’t be trading it in until there’s a reasonable EV option (as much as I obviously love EVs). The value proposition as a family that needs booster seats and cargo space is just too good. For now.
Commercial materials/components have far outpaced inflation. I buy $10m commercial procucts annually and none of Tesla’s price increases are out of line with what I am seeing. Usually consumer goods are slower to rise for fear of sales drops, but Tesla is a luxury item (certainly after the price increases) so they can raise the prices right in line with the hit they are taking from the supply chain. It’s also possible they are actually raising wages/salaries in line with inflation, unlike most employers.
Correct!! Look at the construction industry with 50% price increases!
A cheap junk car with amazing technology at a crazy price. I have my order in with Fisker ocean one
Former model y owner
Just put an order for one right before the last price increase. Pretty sure we’re going to see another one again this year.
46k now
what was your purchase price?
Have you seen the price of food especially kosher food ? 25% increase is pretty standard especially with Putin making the USD similar in value to the Rouble with Bidens help…
When will they finally release the model y with the new 4680 battery packs?
Serious competition has arrived. I know people have been saying that for years but it’s real now. BMW just releases new electric sedan that’s impressive. Lucid air is competing with the model S. I don’t blame them for raising prices but competition will drive them down.
Lucid lol. The competition is Toyota.
Just got the Mustang Mach-e long range and love it!!! There are good alternatives to Tesla.
Just curious: what’s your safety score?
91
Hopefully you should get FSD Beta in the next few months once reliability improves. They are planning to release to 95 scores with the current version (10.11)
As far as I understand your safety score is not affected just by using the brake instead of regen. But it is possible to brake harder with the pedal and that will affect your score.
From Tesla’s website:
“Hard braking is defined as backward acceleration, measured by your Tesla vehicle, in excess of 0.3g. This is the same as a decrease in the vehicle’s speed larger than 6.7 mph, in one second.”
https://www.tesla.com/support/safety-score
The score is affected by a bunch of things. Like FCW (Forward Collision Warning). And the Tesla implementation of FCW is terrible. It doesn’t take into account that a human is driving, and a human can see a driveway into a shopping center, and a human can see someone signaling right, and a human can see the car ahead turning right, and can easily judge that there is no need to brake because the car ahead will be long gone by the time the Tesla gets there. Meanwhile, FCW alerts many times in that scenario because the Tesla still sees the car ahead, and the car ahead is slowing to turn.
@dan. Are you saying you are not happy with your Tesla anymore? I ordered a model 3 a few months ago. Are you not recommending it anymore?
You wrote it seems like the federal rebate is being revived. Where did you see that? Thank you
Overall I’m very happy with it. I’m just disappointed that the software took a step backwards.
The SW has definitely had issues lately. I’ve noticed a bunch of bugs, including some big safety-related ones (like not showing rear view while driving back). I don’t even know how to formally report the bugs to Tesla!
I’ve been waiting 6 months for my first Tesla. Will they honor the price on my purchase order or charge me the new higher price??
They will honor the price from the time of reservation, as long as you don’t change your order
I have a model 3 on order from mid September, how does it work selling on gray market?
Dumbest concept for cars. Any savings is prepaid in the price of a car. You get a model 3 and you basically have a Honda Accord you over paid $15K for
No amount of gas savings makes it worth it and enjoy waiting for 30 minutes for your car to recharge on a round trip
What Honda Accord can do 0 to 60 in 4 seconds?
The one that has a full glass roof and heated rear seats.
The economics of an EV car nowadays make absolutely no sense for most people even at $4.25/gal. Take a Hyundai Kona ~12K (after tax credit) premium on a the EV Car. If someone drives 12K miles a year the difference between between charging costs and gasoline are ~3,350/year. So the breakeven on the car is ~3.75 years. At $3.25/gal that breakeven goes up to ~5 years, and at $2.55/gal (avg US gas price 2016-19) it’s ~6.25 years. And that is not accounting for time value of $$ or the extra interest paid on any loan.
The economics of the Tesla at the new prices are completely upside-down. Instead of a model 3 – a good comparison is a Mercedes A Class that apples for apples is ~$18K less. Instead of a model S LR, an Audi A7 will run ~25K less. That’s a huge premium on car manufacturer that data shows us has ranked 27 out of 30 in JD Power dependability surveys and ranked behind Jeep! It just shows that marketing hype is effective and cognitive dissonance alive and well among consumer behavior.
Meh, I remember the days (circa 2018) when seeing a Tesla on the road was a cool and exciting sighting. Today, every Tom’s River type d-bag seems to have a Tesla and it’s unfortunately long lost it’s appeal. ICE ftw!
Dan, you think it’s expensive by you?
Try to get a Tesla in Israel..
But in my opinion a good value for the money
I have a Tesla Model 3 with a long range battery. First, the battery isn’t really long range. Seems not to get nearly the amount of miles it’s supposed to. Second, I have had numerous instances where I am driving on cruise control on the highway and the car comes to an almost complete stop for NO reason, no car or anything in front of me. Luckily I put my foot immediately on the pedal because otherwise I would be rear ended by the car in back of me!
@Dan, you mentioned Grey market resales. Can you please provide more info?
I have 2 Rivian reservations from before the price increase (over 16k increase each) and I definitely don’t need one of them, maybe both
I find the consumerism of this whole post a bit distasteful. I understand this is a deals site, but most people cannot afford a tesla. The kvetching about features of a fancy car just seems a shallow these days.
Model 3 wasn’t made to be a fancy car, it was made to make EVs accessible to all. The “kvetching” is that the price has gone from 35K to 47K, into the realm of a fancy car.
The recent wave of price increases has little to do with inflation but more to do with keeping demand in check. If folks still buy the product then more money for tesla and if they don’t then that solves Tesla’s short term demand issue. Either way they win unless the competitors truly come out with a product and charging infra that rivals tesla, until then Tesla is in the driving seat and they will dictate the terms.
The entire auto industry has gone up in price. My used 10 year old Sienna is worth more than when I bought it. Nothing to do with Tesla and selling your car a profit is useless when to replace that car you will pay the inflated proces for another car – regardless of brand.
Raising prices is the only way to slow demand otherwise wait times would be 1 year plus. More profit means faster factories.
check out polestar 2 as an altenative. doesnt have the tech but is a great car and you can get in a week
@Dan
You said looks like the EV Federal Rebate will be revived, can you elaborate? Is that in the near future, in 2022 etc?
I once heard that most of Tesla’s profit is not from the sale of actual cars (If I am wrong, I am sure Dan will correct me 😉 ). It makes sense that Tesla would want to start making a profit on the cars themselves to justify the stock price. Until some other company can make a better car and sell it for less, the prices will continue to climb until the market for electric cars is saturated (which won’t happen anytime soon).
Our order keeps getting pushed back further. It’s crazy!