By on March 15, 2022

Tesla is receiving a lot of attention for having increased prices twice in one week. The Model 3, often presented as the company’s most-affordable option catering to the masses, now starts at $48,440 in the United States. Its crossover equivalent, the Model Y, now starts at a whopping $64,400 while larger products have surpassed the six-figure point of entry. Despite being the brand’s oldest model, the Model S saw increases over the summer (when it was just $90,000) and has since settled into $101,200 before you’ve even said the words Plaid or Full Self Driving. But the Model X remains even more expensive at $116,200.

Worse yet, those who can afford such vehicles won’t even be able to get them in a timely fashion. Despite weathering COVID restrictions rather well vs legacy automakers, supply chain issues seem to have caught up with the EV manufacturer. Wait times on order vehicles are now several months long. Some customers are being told that they’ll likely have to wait until 2023, specifically those hoping to score a Model X. 

It’s not looking good if you were hoping to get a sweet deal on a luxury EV. But we need to remember that Tesla’s ordering process circumvents the dealer model, making price increases more immediately apparent. Legacy automakers have also increased prices, but they dwarf the varying markups being tacked on by dealerships with weak inventories. If you watched what happened to the new and used car markets through 2021, then Tesla raising prices shouldn’t be much of a surprise.

What is alarming, however, is how quickly prices have climbed. Tesla issued back-to-back increases, with CEO Elon Musk hinting that the rising cost of raw materials was the culprit. Over the weekend, he was tweeting about the long-term implications of inflation before sharing a study from the Financial Times reporting that the price of raw materials hasn’t increased this quickly since at least 1970.

Think of this as less of a condemnation of Tesla (though we have plenty of articles covering that) and more of it serving as an example of how quickly the industry is raising its rates. Things are not getting better for consumers. In fact, they appear to be getting much worse as the inflation curve grows ever steeper.

The most recent data from the U.S. Bureau of Labor Statistics show the current inflation rate at 7.9 percent. But economists have suggested that’s not necessarily representative of the total market if you take into account how quickly prices have risen on fuel, automobiles, and food. While the latter aspect falls slightly outside our purview, the National Automobile Dealers Association (NADA) has already said it expects auto prices to remain exceptionally high throughout 2023. Meanwhile, automakers have stopped discussing lofty stickers as a temporary issue and have started exploring how to maintain healthy profits by placing a greater emphasis on higher-margin vehicles. This is something U.S. manufacturers had been doing already, raising the average transaction rates on new vehicles years before inflation was even a consideration.

The only upshot is that a majority of economists are predicting that things could begin returning to normal by the end of the year. Of course, that’s also what they said in 2021 before we saw the largest inflation rate in several decades.

[Image: Virrage Images/Shutterstock]

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29 Comments on “Tesla Raises Prices Twice This Week...”


  • avatar
    jack4x

    The price of a RWD Model 3 has increased by close to 30% in the last 12-15 months. I’m not aware of any legacy automaker who has raised MSRP on any model by anywhere near as much in the same time.

    Obviously the market will bear it, but can we please stop pretending that direct sales is some kind of financial win for consumers? All it changes is which hand is reaching into your pocket.

    • 0 avatar
      Matt Posky

      Who is pretending otherwise?

    • 0 avatar
      CoastieLenn

      Tesla is doing in their direct sales model what dealerships are doing with their floor plan model. Dealers adding ADM is basically equivalent of Tesla toying with MSRP.

    • 0 avatar
      SCE to AUX

      Direct sales save money for the mfr, which indirectly saves money for the consumer.

      Tesla’s price increases are unrelated to the direct sales model.

      Legacy dealers are routinely adding markups on cars, which I discovered first-hand last week when I managed to buy a car at MSRP and 0%/48. Its just that you don’t see dealers announcing it like Tesla has to do.

      A Hyundai dealer in MD told me they’re adding $2-5k to every car, which is about the same percent as Tesla.

      • 0 avatar
        jack4x

        Your story is a perfect encapsulation of my point.

        You were able to locate a dealer willing to sell at MSRP. Just because some dealers add markups doesn’t mean it’s universal.

        Tesla raising prices hits everyone, dealer markups only punish those too lazy or ignorant to shop around.

        If any other automakers were raising MSRPs by anything close to what Tesla has done, I’d believe Musk’s excuse about material costs. The fact is that they aren’t, and Tesla is engaging in the same gouging that dealers are. It’s just more deniable since it isn’t quite as blatant as the dealer adding a markup sticker.

        • 0 avatar
          FreedMike

          @jack:

          No, direct-to-consumer is better, for one simple reason: the price is transparent, and everyone pays the same amount. No dealer fees, last-minute “Denver market adjustment,” Tru-Kote, or such nonsense. Those who don’t want to shell out the asking price can buy something else.

          YMMV, but that sounds better to me than buying something as expensive as a Tesla and wondering if my neighbor got a better deal than I did.

          I think the existing system appeals to people who think they’re good at negotiating (hint: they probably aren’t).

          • 0 avatar
            jack4x

            “The price is transparent, and everyone pays the same amount.”

            That might be fairer, but better depends on your point of view.

            “I think the existing system appeals to people who think they’re good at negotiating”

            Guilty as charged, but not in the sense of “let me take this price back to my manager”. I don’t have patience for that and no one should. If a dealer won’t give you a price via email before you arrive, they aren’t worth dealing with in the first place. It’s not a great deal of effort to call or email a few places before stopping in.

            I’m not arguing that the direct sales model would have no benefits. I do think benefits are ascribed to it that wouldn’t really exist, and I do think the average person would pay more for a car under that system, just as they do now at “no haggle” dealerships.

        • 0 avatar
          SCE to AUX

          @jack4x:

          Actually, it looks like ATPs are up a lot, but unevenly:

          https://cdn.motor1.com/images/custom/kbb-feb-2022-average-vehicle-transation-prices-2.JPG

          1-year increases through February 2022:
          Acura 21%
          Buick, Cadillac, Chevy: 15%
          Chrysler, Dodge, 14%
          Honda 14%
          Hyundai 16%
          Jeep 21%
          Kia 18%
          M-B 17%
          Mitsubishi 30%
          RAM 13%
          Tesla 15%
          Toyota 12%
          Volvo 18%
          VW 15%

          Note that Tesla shows only 15% through February, similar to the others. I’ll bet the others start going up again – either from the mfr or at the dealer.

          • 0 avatar
            jack4x

            @SCE,

            Again, that is my point. I’m not arguing for the dealer system, just against the persistent idea that it would magically lower prices for people.

            Tesla is no better or worse than the others on your list, and it doesn’t offend me any less if they are the ones marking up the product vs. a dealer. If there’s demand, someone will be raising the price.

          • 0 avatar

            Ford is conspicuously absent from this list. Do they sell for less than MSRP?

          • 0 avatar

            Jack4x….if you go over to Reddit, r/askcarsales, they universally loathe the email request and say they won’t quote a price unless you are a live person physically there. The other bits are they don’t care, there are three people behind you desperate, stupid, or rich enough to pay the ADM so pay. While this subreddit is made up of and moderated by car salesmen, and unabashedly pro dealer (gag), they are a great insight into the “minds” behind the desk, and/or in the manager’s office. (Who came up with making the saleman your ally (not) in dealing with THE MANAGER ?) My response to the system is buy once cry once, and run it into rust. This doesn’t work for everyone, I DIY a lot so I don’t see $1500 german car brake jobs, but that subreddit is a great insight into the daily of a salesman

          • 0 avatar
            SCE to AUX

            @Inside Looking Out:

            Ford was up 2.7%. I didn’t list out every mfr shown in the link.

          • 0 avatar
            SCE to AUX

            @jack4x:

            I’m sure those ATPs include dealer markup.

            My point is that direct sales are unrelated to the price increases.

            Eventually, mfrs are going to cut out the middleman and go to direct sales; this will happen when the mfrs approach the state legislatures asking to change franchise protection laws.

        • 0 avatar
          Jeff S

          It’s called greed. That’s what Musk is all about.

          • 0 avatar
            SCE to AUX

            Look at those other mfr price increases. Nobody is running a charity.

          • 0 avatar
            jack4x

            @SCE,

            Don’t those ATPs factor in dealer markups?

            If you or anyone can find a single other model that has seen MSRP increase by 25-30% in the last 12 months I’ll retract the point. Otherwise I stand by the statement that Tesla is gouging as bad as any dealer.

    • 0 avatar
      ajla

      I haven’t done the math but if you factor in the loss of incentives I doubt Tesla has really increased that much more that other manufacturers.

  • avatar
    golden2husky

    Tesla is just being a capitalist, albeit a greedy one. They see all the noise about gas prices and while I’m sure Tesla’s costs have risen lately, they think they can cash in on the panic over the cost of fuel. I never understood people dumping a car over its mileage as all the other costs associated with doing so will wipe out your “savings” for a looong time in most cases. But if people are foolish enough to do so, Tesla is ready to pad it’s bottom line.

  • avatar
    SCE to AUX

    “a majority of economists are predicting that things could begin returning to normal by the end of the year”

    I don’t follow economists, but that seems like a ludicrous prediction. Plaid, even.

  • avatar
    FreedMike

    Good thing I’m not buying a Tesla.

  • avatar
    ajla

    I’ve noticed that the MSRP on the M340i has gone *down* a little since 2020 and according to this BMW as a brand isn’t doing markups:

    motortrend.com/news/avoid-dealer-markups-
    2022-brands-pricing/

    I’m not sure if there is more to the story but at least on paper it has taken the 3-Series from one of the more expensive class options to a mid-pack one.

    • 0 avatar
      SCE to AUX

      Per my comment above about the MD Hyundai dealer with the $2-5k dealer markups:

      – The markups are not posted on their Cars.com listing.
      – The markups are not posted on the dealer website.
      – The dealer told me that Hyundai doesn’t want them to mark up, but they do it anyway.
      – I was told on the phone that it wasn’t bait-and-switch because they advised me about the markup when I inquired about a certain vehicle. The definition of “bait and switch”: “the action (generally illegal) of advertising goods which are an apparent bargain, with the intention of substituting inferior or more expensive goods.”

      So I’d inquire of BMW dealers about your specific interest. The mfrs seem to be giving lip service to no markups allowed, while turning a blind eye to the practice in the field.

      • 0 avatar
        ajla

        It looks like Edmunds compiled actual purchase data for their list so I’d assume it avoids “unadvertised” markups you mentioned. Granted a lease-heavy brand like BMW might still be doing something cute to get the extra money.

        edmunds.com/industry/press/8-out-of-10-of-
        car-shoppers-paid-above-sticker-price-for-
        new-vehicles-in-january-according-to-
        edmunds.html

  • avatar
    Master Baiter

    When you can’t build enough to satisfy demand, it would be against Musk’s fiduciary responsibility to NOT raise prices.

  • avatar
    kcflyer

    When government policy causes the dollar to lose 15 percent of it’s buying power in less than 12 months and the politicians are doing everything they can to accelerate that policy it should surprise no-one that car prices increase.

  • avatar
    Roader

    BLS reported on the Producer Price Index (PPI) yesterday:

    “Prices for final demand goods jumped 2.4% in February, the largest advance since data were first calculated in December 2009. Final demand prices moved up 10.0% for the 12 months ended in February.”

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