Why Is the Price of the Tesla Model 3 and Model Y Increasing Again?

Tesla has been quietly raising prices on the Model 3 and Model Y behind the scenes. Why are prices increasing? Elon Musk says the brand has been hit by raw material prices increasing, much like the rest of the industry.

Is the Tesla Model 3 going to get cheaper?

A Tesla Model 3 and Model Y
The price of the Tesla Model 3 and Model Y is increasing again | Zhe Ji/Getty Images

As reported by Electrek, electric vehicles are likely not going to go down in price anytime soon. Like most industries, Tesla is not immune to price increases across the board. With the supply chain issues impacting the industry and the semiconductor chip drama, it isn’t a surprise the price has gone up. What is a surprise, though, is how Tesla seems to be raising prices.

It seemed arbitrary at first glance, and perhaps it is. The Model 3 and Model Y have increased seven times in the past few months. Each time it was just a bit. $500 here and another $500 a few weeks later. Eventually, it all starts to add up.

Back in February, the Model 3 Standard Range Plus price increased from $37,000 to $40,000. That’s more than 8%. The Model Y Long Range AWD was under $50,000 but is now starting at $52,000.

So far, it does not seem that any of the Tesla models are going to get cheaper. If the supply-chain issues persist, the cost of the vehicles will likely increase before decreasing.

Did the Tesla Model Y price go up?

Elon Musk responded on Twitter when someone commented about removing lumbar support in the Model Y seats. Musk responded that prices are increasing due to “major supply chain price pressure industry-wide” and that raw materials were a large part of that.

Electrek noted that the price of copper has doubled since the pandemic started, and other materials like steel and aluminum have also increased. Some drivers have speculated that removing lumbar support is a way of cutting costs in a roundabout way. It isn’t a major point of functionality, but what will the brand remove next to save some cash? Will prices continue to increase while parts continue to get removed?

The issue seems to be that buyers placed an order for a car with certain features, and the cars are being delivered without said features. How many will more things be removed to continue to fulfill orders? Buyers were unaware of the lumbar support being removed before delivery, which has only added to the backlash.

If nothing else, the situation is confusing for those about to take delivery of a new Tesla. Will buyers get the car ordered, or one without lumbar support? Will radar be included?

Consumer Reports and IIHS are reeling from changes

Last week, there seemed to be some misunderstanding between Tesla, Consumer Reports, the IIHS, and NHTSA. While Tesla vehicles were being delivered without radar, it was widely reported that the Insurance Institute for Highway Safety (IIHS) and National Highway Traffic Safety Administration (NHTSA) were dropping awards given to the Model 3.

It seems that is not the case as it stands right now, but the IIHS and NHTSA will likely do testing on the vehicles soon. Electrek contacted Elon Musk directly to confirm the issue.

“Just confirmed with the Autopilot team that these features are active in all cars now, including vision-only. NHTSA automatically removes the check mark for any cars with new hardware until they retest, which is happening next week, but the functionality is actually there.”

Elon Musk | Electrek

The report went on to say that some owners took delivery of the Model 3 and Model Y over the weekend, and these features were active. The NHTSA and IIHS will likely be testing the new cars in the upcoming weeks, at which time we will know more. It does sound like the safety features are active at this point.

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