Tesla has bumped up prices for its two least-expensive models. The Model 3 Standard Range Plus and Long Range all-wheel-drive (AWD) and Model Y Long Range each went up by $500 overnight.
The new prices are:
- Model 3 Standard Range Plus: $39,990
- Model 3 Long Range AWD: $48,990
- Model Y Long Range: $51,990
This is the sixth price increase for these two electric vehicles in 2021 and the second in May.
Tesla lacks a public relations department, so it never explains price increases. But we have a good idea of why the price bumps are happening.
The company does not follow the traditional auto industry model of improving cars only between model years. Instead, it makes changes during a production run. Each change affects the cost of building the car.
Tesla has also navigated the global microchip shortage differently than other automakers. While its rivals have slowed or paused production of some models due to lack of processors, Tesla explained in a recent investor report that it has responded by “pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”
That practice can enable it to continue building cars as long as it can obtain at least some functional microchips, but likely requires constant effort behind the scenes to make new components work well in existing designs – an added cost.
Tesla builds four of the five best-selling electric cars in America. It is under increasing competition every day, however, as traditional automakers roll out new electric vehicles (EVs) at a rapid pace.
