Amid a falling market, shares of the leader in electric vehicles Tesla (TSLA) -7.73%) fell more than most, falling 7.2% as of noon ET Thursday after Reuters reported that Tesla is once again raising the prices of its electric cars.
Citing the rising cost of raw materials and ongoing problems obtaining auto parts to build its cars efficiently, Reuters noted that Tesla increased the price of its popular Model Y crossover by about 4.8%, to $65,990 for the “long range” version. .
However, Tesla does not stop there. Digging into the details on Tesla’s website, Electrek reported last night that the prices are as follows:
- The price of the Model 3 Long Range has risen the most in percentage terms, rising 6.4% to $57,990.
- The Model X Dual Motor All-Wheel Drive Long Range price increased 5.2% to $120,990.
- The Model S Dual Motor All-Wheel Drive Long Range price rose a similar 5% to $104,990.
- The Model Y Performance crossover was up just 2.9% to $69,990.
- The “checkered” versions of both the Model S and Model X were flat at $135,990 and $138,990, respectively, with no change in price.
Looking at the changes, there is no discernible pattern of where Tesla is raising prices more and where less. While the “Plaid” price is already the highest for both the S and X and isn’t budging, Tesla’s other Model X doesn’t cost much less, but its price has risen significantly.
The biggest change in pricing has been on the Model 3, and raising the price of Tesla’s entry-level EV may be a move to encourage customers to skip over the Model 3 and pay a little more to get a car. even better and bigger. Similarly, price changes to the Model Y reduce the price differential between low-end and high-end models, which could also be aimed at persuading buyers to buy a little more of the car than they intended.
To that extent, therefore, it almost seems as if raising prices might be Okay news for Tesla, and that the investors who are selling the stock in today’s news are making a mistake, but for one thing.
Just two days ago, Elon Musk was quoted as telling his audience at the Tesla Silicon Valley Owners Club that he thought the electric rival Rivian (RIVN -8.84%) it made a mistake when it tried to raise the prices of its electric trucks and SUVs in March. When you raise prices, Musk said, “you exponentially reduce the number of people who can afford vehicles,” as Electrek reported.
However, if that’s true for Rivian, shouldn’t it be true for Tesla as well? By raising his own prices, Musk does not risk depressing demand for new Teslas, at the same time that rivals such as Hyundai and Ford Y GM — and yes, Rivian too — do they bring new and sometimes cheaper alternative electric vehicle models to market?
Because if that’s the case, then that could be a good reason why Tesla stock is down today.