Tesla price hikes due to parts and materials supply issues, Musk says

Model 3 and Model Y starting prices up thousands this year

Tesla's prices have been on the rise in recent weeks, but it might not all be due to demand for its vehicles.

The Tesla Model 3 Standard Range Plus and Model Y Long Range had base prices of $36,990 and $49,990, respectively, as recently as February, but now start at $39,990 and $51,990 after more than a half-dozen increases.

Responding to criticism of the moves on twitter, Elon Musk said they were due to "major supply chain price pressure industry-wide. Raw materials especially."

Along with the semiconductor shortage that is hampering the auto industry, the prices of several key materials, including foams and metals, has been on the rise this year due in part to ongoing manufacturing and shipping issues caused by the coronavirus pandemic.

Tesla sells its vehicles directly to consumers at a fixed list price, which frequently changes, rather than using incentives to respond to supply, demand and increased costs like most automakers operating in the U.S. do.

The average transaction price for new vehicle sales reached a record $40,768 across the industry in April, Kelly Blue Book reported.

Musk in February confirmed that Tesla's Fremont, Calif., factory suspended production for two days due to "parts shortages" without specifying the component in short supply. In explaining the price increases, he also revealed that the automaker has removed the adjustable lumbar support from the front passenger seat to reduce costs because data showed not many people used it.


According to Electrek, BMW has recently removed the feature from some models due to a shortage of parts, but has reduced the price of the affected vehicles accordingly.