Tesla has raised the price of its standard Model 3 sedan five times in the past three months, and CEO Elon Musk says global chip scarcity is to blame.
The shortage, due to supply chain disruptions from the coronavirus pandemic, has disrupted the production of goods in numerous industries, from smartphones to toasters. Automakers have been hit particularly hard; Car factories around the world have been forced to close due to a shortage of semiconductors that control more and more functions in their increasingly computerized cars. And Teslas are perhaps the most computerized cars out there.
Musk said the shortage of chips made it difficult for Tesla to maintain production during a conference call in April. “The first quarter had some of the toughest supply chain challenges we’ve ever seen in the life of Tesla,” he said, adding, “Obviously, people have heard of the chip shortage.”
Yesterday (May 31), Musk said these challenges have forced the company to charge more for its Model 3 and Model Y models. “Prices are rising due to industry-wide price pressure in the supply chain,” he tweeted in response to a complaint from a Twitter user that Tesla prices had risen despite the fact that the company had removed features such as adjustable lumbar support for Model Y passengers.
Tesla’s list price (also known as the manufacturer’s suggested retail price, or MSRP) for the base version of the Model 3 sedan rose from $ 36,490 in late February to $ 39,490 in May (an increase of about 7%) during the standard model Y The price of the SUV rose from $ 49,990 to $ 51,490 (an increase of about 3%). However, Tesla’s Model S luxury sedan has not seen its price increase; The sticker price has stayed at $ 79,990. (This may have to do with the fact that a proposal to expand tax credits for electric vehicles, which is currently gaining ground in the US Senate, would only apply to cars that sell below $ 80,000. Price increases on the cheaper cars would be offset by the new loan, but luxury model buyers would not have such a cushion, so Musk might spare them.)
While Musk blamed supply chain challenges for the price increases, Tesla observers have suggested that there could be other motivations as well. The electric vehicle blog site Electrek considered in a May 7 post that Tesla could benefit from the increasing demand for electric vehicles.