To The Moon

Tesla is responding to increasing supply costs by raising prices on Model 3 and Model Y in several key markets.

All Model 3 and Model Y configurations have simultaneously had their pricing increased by $250 on Tesla’s U.S. site as of 3am EST Tuesday morning.

This makes the most affordable Model 3 Rear-Wheel Drive configuration $40,240 as compared to $39,990, and similarly raises the starting price of Model Y All-Wheel Drive to $47,240 from $46,990.

Model S and Model S Plaid were unaffected at starting price points of $87,490 and $107,490 respectively. Model X and its Plaid configuration were also unaffected, remaining at $97,490 and $107,490.

The price increase affects North America, China, Canada, and Japan.

Real Talk

Our impression is that Tesla has to succumb to rising material costs, in this case prioritizing margin over sales volumes.

While the automaker has strategic deals in place for its batteries, lithium and nickel have seen volatile pricing. Other aspects of the complex supply chains may also be affected.

Tesla could theoretically sell vehicles with minimal-to-no profit margins then recoup margins down the line with Full Self-Driving, although the automaker is apparently still focused on maintaining gross margins.

This isn’t the first time that Tesla has issued a mostly insignificant price increase, although this is the most far-reaching of its kind to date.

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