Tesla has quietly raised the price of its cheapest car by $10,000 over the last year
Tesla
- The Model 3, Tesla's cheapest vehicle, costs $46,990 after a price hike.
- Roughly a year ago, it started at $10,000 less.
- Tesla CEO Elon Musk said the company is facing steep increases in the cost of logistics and raw materials.
Tesla's Model 3, introduced as a mass-market electric car that could bring in a wide spectrum of buyers, is getting more and more out of reach for everyday consumers.
After a recent price hike, Tesla's cheapest model now starts at $46,990, or $48,490 when you include a $1,500 destination fee. About a year ago, the Model 3 carried a starting price of $36,990, archived versions of the product page on Tesla's website as it looked in February 2021 show. Initially, Tesla said the Model 3 would start at $35,000, but that price point was never widely available.
Since Tesla sells vehicles direct-to-consumer without a dealer network, it's free to raise and lower retail prices as it pleases. Over the last year, the company has bumped the prices for certain models several times, generally in increments of $1,000 or $2,000.
On Monday, Tesla drastically overhauled the pricing for its entire lineup, raising prices by up to $12,500. The base Model 3 got a $2,000 bump from its previous price of $44,990, while other models saw bigger increases. The price of the Model X Plaid, Tesla's high-performance SUV, shot from $126,490 to $138,990.
The Model S sedan now costs $99,990, up from $94,990. It cost $69,420 in October 2020.
Tesla hasn't commented on the reasoning behind the increases. But the shakeup comes after Tesla CEO Elon Musk said on Twitter that the car company is facing "significant" inflationary pressure in raw materials and logistics. The cost of fuel along with several metals used in auto manufacturing are spiking in the wake of Russia's invasion of Ukraine.
Tesla's increases also reflect what's going on more broadly in the car market. The price of new and used cars has shot up over the last two years as COVID-19 outbreaks, a computer-chip shortage, and supply-chain mayhem have limited the amount of vehicles car companies can produce.
Over the last 12 months, the average price of a new vehicle rose 12%, while used-car prices shot up 41%, according to the US Consumer Price Index, which tracks inflation. In February, the average transaction price for a new car was $46,085, according to Kelley Blue Book, down from a record high in December. That figure rose nearly $10,000 between 2020 and 2021.