Elon Musk Explains Tesla Model 3 And Y Prices Increases

The re-introduction of the federal tax credit is not the reason.

Tesla Model Y interior

Mark Kane

By: Mark Kane

Jun 2, 2021 at 8:38am ET

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Tesla's CEO Elon Musk recently responded to a comment on Twitter about the rising prices and the removal of some of the features. Ryan (@Ryanth3nerd), who posted the comment, was clearly not happy with Tesla's direction in that matter.

The answer about the removed, adjustable lumbar support in the front passenger seat in the new Model 3 and Model Y is simple - the feature was rarely used and it was not worth installing it in the cars.

"Moving lumbar was removed only in front passenger seat of 3/Y (obv not there in rear seats). Logs showed almost no usage. Not worth cost/mass for everyone when almost never used."

In the case of prices, Elon Musk wrote that increases are related to costs (supply chain) - raw materials in particular.

"Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially."

Let's recall that Tesla has increased the prices of the Model 3 and Model Y in the U.S. several times this year. The last time we reported about it was on May 21, 2021.

Tesla prices

Model Base Price Dest. Charge Tax Credit Effective Price 2021 Tesla Model 3 Standard Range Plus $39,990 +$1,200 N/A $41,190 2021 Tesla Model 3 Long Range AWD $48,990 +$1,200 N/A $50,190 2021 Tesla Model 3 Perf. LR AWD 20" $56,990 +$1,200 N/A $58,190 2021 Tesla Model Y Long Range AWD 19" $51,990 +$1,200 N/A $53,190 2021 Tesla Model Y Perf. LR AWD 21" $60,990 +$1,200 N/A $62,190

The difference in prices from early 2021 is quite substantial. In February 2021, the Model 3 SRP was at $36,990. Now it's over $3,000 higher or over 8.1% more. The Model Y LR AWD was at $48,990. Now it's $3,000 or 6.1% more.

What do you think?

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On top of that, there is no more Tesla Model Y Standard Range ($41,990).

Hopefully, the prices will stop increasing, or even return to the previous levels. However, the main reason is the price of raw materials, it suggests inflation, and it would be something difficult to beat.