Tesla has announced a $1,000 price increase for certain Model Y vehicles sold in the U.S. market, as reported on the company’s website on Friday.
According to the electric vehicle manufacturer’s website, the price adjustment affects the Model Y rear-wheel drive and long-range variants, which now stand at $43,990 and $48,990, respectively. However, prices for the Model Y Performance variant and other models remain unchanged as of Friday.
This move comes after Tesla had temporarily reduced prices for some Model Y cars in the U.S. until February 29, following similar price cuts in Europe and China earlier in the year.
In response to a post indicating that prices would rise in March, Tesla CEO Elon Musk commented last month, acknowledging the challenge of balancing continuous factory production for efficiency with fluctuating consumer demand.
Recent trends in the U.S. automotive market have seen car buyers favoring hybrids over electric vehicles (EVs) in light of higher ownership costs and certain EV models losing eligibility for federal tax credits due to battery sourcing requirements outlined in the Inflation Reduction Act.
In January, Tesla cautioned investors about expecting “notably lower” sales growth for the year, citing a focus on ramping up production of its next-generation electric vehicle, internally referred to as “Redwood.”
The price hike by Tesla could potentially bolster the company’s margins, which have been under pressure over the past year amidst a price war among EV-makers, impacting profitability in efforts to maintain market share.
With competition intensifying from affordable EVs, including those manufactured by China’s BYD, which surpassed Tesla as the world’s leading EV maker in the final quarter of 2023, Tesla is gearing up for a challenging landscape. BYD has already begun selling vehicles in Europe and is considering entering the U.S. market.
Tesla shares have experienced a decline of over 18% since the beginning of 2024, though they have seen a modest increase of slightly more than 4.5% over the past year.
