Elon Musk hopes Tesla can lower vehicle prices in the future

Elon Musk hopes to lower vehicle costs when inflation slows down

Tesla CEO Elon Musk says that Tesla may start reducing the prices of its electric vehicles, which have increased 20-30% in the past two years.

When Musk was asked about when we can expect Tesla to lower its prices again, Elon said that Tesla could lower prices when "inflation calms down."

One of the main complaints about Tesla's electric cars is their cost. In late 2017 Tesla started with the Long Range RWD Model 3, and over the period of the next year or two, prices actually went down as Tesla reached volume production and manufacuring efficiencies.

However, as we hit 2020, the pandemic caused supply chain challenges and inflation that adversely impacted the auto industry along with the broader economy.

In early 2020, the Tesla Model Y started at $53,000. Today, the same vehicle starts at $66,000 representing a 25% increase in price in less than two years.

However these drastic price increases have not affected demand. In fact, recent inflation of gas prices has contributed to a significant backlog of orders. Some Tesla models having a 6 to 10 month delivery timeline on new orders.

Although Tesla has been increasing prices over the last two years, its gross margins have also increased. This means that Tesla's price increases have been greater than their cost increases.

This is because Tesla has to set prices based on the cost of vehicles produced in 6 to 10 months from now rather than the cost of vehicles produced today.

Put another way, vehicles being ordered today are priced based on the cost of vehicles produced (and delivered) in 6 to 10 months from now in order to account for future cost increases.

With so much uncertainty around the supply chain and inflation, it is hard for Tesla to predict those costs accurately.

If inflation calms down, we can lower prices for cars

— Elon Musk (@elonmusk) July 15, 2022

Once these issues are resolved, Tesla hopes to reduce their prices. A big part of Tesla's mission is to reduce electric vehicle prices to make them accessible to everyone.

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Tesla Announces Significant Price Increases Across Vehicles in Canada

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Tesla has announced steep price increases for its vehicles in Canada, with adjustments of up to CA$9,000 set to take effect on February 1, 2025. This move impacts nearly all models, with the Model 3 Performance trim seeing the steepest hike, rising from $70,990 to $79,990 Canadian. The Model Y, Model S, and Model X will each see a flat increase of CA$4,000 across all trims. Notably, the Cybertruck remains unaffected by these changes.

These price hikes coincide with the expiration of Canada’s federal EV incentive program, which previously offered CA$5,000 rebates on eligible vehicles, further increasing the price of Tesla vehicles.

Additionally, the Canadian dollar’s recent decline against the US dollar and looming trade tensions between the U.S. and Canada may have influenced Tesla’s decision. President Trump proposed a 25% tariff on Canadian goods, and Tesla may be expecting Canada to retaliate with a similar tariff on US goods. However, it’s interesting that Tesla has chosen to raise prices so drastically before any tariffs have been announced.

Price Increases

Buyers

This could be a critical time to act for prospective buyers, with the price increase going into effect in just about a week. Tesla’s online configurator allows customers to lock in current prices by placing an order before February 1st. The company’s referral program also offers CA$1,300 off Model Y, Model S, and Model X purchases, providing additional savings before the price hike takes effect.

It’s not clear how much these adjustments will impact Tesla sales in Canada. If the increases are related to an upcoming tariff, then they’ll impact other manufacturers as well. We may see a potential surge in orders ahead of the February 1 deadline, especially for the AWD and Performance variants of the new Model 3, which will see the largest increase.

The price increase is expected to impact the new Model Y as well, which was announced last night for North America and Europe. Deliveries for the new model begin in March.

If you’re on the fence about whether you should order a new Tesla, now may be a good time to place your order. Tesla offers the ability to cancel your order, but buyers would lose their deposit.

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Tesla Unveils New Model Y in North America and Europe: Key Differences From Asia-Pacific Version

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Tesla has officially launched the refreshed Model Y in North America and Europe, just 13 days after the launch for the Asia-Pacific Markets.

Just like the other markets, Tesla will be starting with the Launch Edition, which will include FSD and Acceleration Boost. It will also include other smaller details such as Launch Edition badging, puddle lights, special wordmark logos on the door sill plates, and wireless charging pads, as well as an exclusive textile trim and black vegan suede interior.

The new Model Y is available for pre-order immediately but will only begin shipping in March, which is surprisingly sooner than the market where it was initially unveiled. Due to the new model, Tesla has also begun to offer some compelling inventory discounts for the now, last-gen Model Y.

Pricing

Pricing for the new Model Y includes the Launch Edition package - similar to the Foundation Series Cybertruck pricing - a premium launch bundle that will give you a fair amount of additional features and get you earlier access to the new Model Y.

What’s unique with this launch is that color and wheel selection are included in the price - so you can choose from Stealth Grey, Pearl White Multicoat, Ultra Red, and Quicksilver in North America and Black/Quicksilver in Europe without any additional fees. You can also pick from the 19” Crossflow wheels or the 20” Helix 2.0 wheels in North America, while Europe is limited to the 20” Helix 2.0 wheels.

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Tesla did not announce the price for the non-Launch Edition versions of the vehicle. This includes the RWD, Long Range AWD, and Performance variants. We’ll likely see these launch in the coming months but expect Tesla to continue to sell the Launch Edition as long as there’s demand. Given that the Model Y is the world’s best-selling vehicle, it could be a while before we see a non-bundle version.

Tesla’s site currently only lists the new Model Y with its Long-Range All-Wheel Drive variant. The Long-Range Rear-Wheel Drive variant is currently unavailable in North America and Europe, but the specs are listed on the “Compare Models” page.

*Canadian Prices include the recent price increase.

**EU prices may vary by ordering nation.

The new Model Y comes in well above the price for the Performance variant of the previous Model Y. However, remember that this includes the $2,000 Acceleration Boost package, the $8,000 FSD package, and all of the other smaller add-ons. If you were already planning to buy the FSD and Acceleration Boost packages, it ends up being a decent deal, but the biggest attraction is the ability to get your Model Y much sooner.

Y pic.twitter.com/Dnr4IxVujb

— Tesla (@Tesla) January 24, 2025

What’s New

We dived into what’s new on the New Model Y here, and also looked at all the little updates here, but here’s a summary of all the changes.

• The first-row seats are now ventilated as well as heated.

• The second-row seats are now powered for two-way folding

• 8” touchscreen for the second row

• New suspension

• New noise reduction hardware, including acoustic glass on all windows

• Front bumper camera with washer

• Frunk is not powered, but includes a drain hole

• Three 65W USB-C ports for charging larger devices like laptops

• Fog lights have been removed

• The car is 1.6” longer

• 2 additional speakers over the previous LR AWD, for a total of 15 speakers + 1 subwoofer.

• New connectivity hardware, likely featuring 5G and Bluetooth LE support.

• Wrap-around ambient interior lighting

• Aluminum and textile detailing (Launch Edition)

• Metallic infrared reflective coating on all glass for better heat reflection

• Power-actuated second-row vents

• One stalk for signaling. Shifting is now on the main screen.

The front-end view.

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Asia-Pacific Differences

RWD Variant: There are three key differences for the North American and European launches, versus the Asia-Pacific launch. First off, the Long Range Rear-Wheel Drive variant isn’t available for ordering at this time. That’s a pretty big hit - because it was the far more affordable version of the refreshed Model Y. With the new pricing forcing buyers to buy FSD and Acceleration Boost, making it more expensive than the Performance model, it could lead some buyers to hold off until the Launch Edition is over.

Glacial Blue: Second, the new color - glacial blue - isn’t making its way to North America or Europe at this time. In fact, the color palette for the Model Y appears to be limited to Stealth Grey, Pearl White Multicoat, Ultra Red, and Quicksilver in North America and just black and Quicksilver in Europe.

Tow Hitch: Third - and honestly the most exciting - a class II tow hitch, capable of towing the same 3,500 lbs of weight, is available in North America and Europe, and it is included as part of the features for the Launch Edition.

Mobile Charger: In North America, Tesla is bringing back the bundled mobile charger with the new Model Y. However, this is expected to be unique to the Launch Edition. Unfortunately, it’s not included in Europe.

With deliveries slated for March, we’re excited to see the first few arrive in North America and Europe arrive in the next 5-10 weeks. We’re sure the refreshed Model Y will be making its way to Tesla showrooms, as well as Auto Shows in both markets sometime soon - so stay tuned.

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