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Tesla is at it again. Another round of price increases hit the last weekend in October, which appears to be at least the sixth price increase on its more affordable models in 2021.
And this round was a big one. Model S and Model X prices jumped by $5,000, while the Model 3 and Model Y saw another $2,000 increase.
Tesla hikes prices for its base models
Roadshow by CNET reported that Tesla bumped the price for the Model S Long Range, its least expensive version, to $96,190. The Model X Long Range, also the lowest-priced version, also climbed to $106,190. Both represent a $5,000 increase.
The base price for the Model 3 jumped to $45,190, while the Model Y now starts at $58,190. These prices reflect a $2,000 increase. The prices listed by Roadshow include a mandatory $1,200 destination fee.
When the new Model S was introduced in January, it was listed at $80,000, meaning the price has increased nearly 19% (factoring out the destination fee) in just nine months. Tesla just began deliveries on the Model X, so this reflects the first price increase for that model.
Tesla has not increased prices for the Plaid models with the Model S Plaid standing at $131,190 and the Model X Plaid at $121,190.
Why is Tesla increasing prices?
Tesla doesn't maintain a public relations office to answer media questions and is notoriously quiet about pricing, so determining an exact reason for the spate of price hikes is mostly speculation.
Founder Elon Musk has mentioned during interviews that increased production costs, particularly associated with finding replacement chips during the computer chip shortage, have been a factor in previous price increases for the Model 3 and Model Y.
Increased demand is likely also a factor in the price boosts. More than half the electric vehicles registered in the first half of 2021 were Teslas, so Tesla continues to command the market.
A more affordable Tesla may be on the horizon
These dramatic price increases make it more difficult for many drivers to get into the electric vehicle market, especially if they really want to be in a Tesla. But there is hope as rumors continue to swirl around the Model 2's release in 2023, which is expected to be priced at $25,000 or less.
Musk announced during Tesla Battery Day in 2020 that the company would be working on the $25,000, fully autonomous model. According to Electrek, he has told employees it will be released starting in 2023.
Tesla has been planning to build the electric hatchback at its Gigafactory Shanghai in China, which will be for global export. Word on the street is the production is ahead of schedule from the factory, so the more affordable model might be available even earlier than planned.
Musk's goal for Tesla from the beginning was to build a luxury car that would make the company profitable and then move back toward more affordable vehicles.
For drivers who are happy to look beyond Tesla, more affordable options are certainly available. The Nissan Leaf has always been one of the more within-reach models, and the company announced earlier this year that it was slashing prices on the 2022 models by $4,000-$5,000.