Why Tesla keeps changing its prices
Tesla Inc. has done seemingly nonstop tinkering with its prices this year, moving them lower in dramatic fashion only to occasionally bump them back up. What gives?
Chief Executive Officer Elon Musk has said he's willing to prioritize growth over profits, a stance that has made some investors wary and irked more than a few customers who bought before the discounts.
There are a number of factors at play here, and a lack of consensus as to whether it all amounts to disruption or desperation. Here's what you need to know:
For years, Tesla's cheapest car closely tracked the average amount US consumers were paying for new vehicles. Only $300 or so separated the starting price of the Model 3 and the industry's average transaction price.
When the sedan went into production in 2017, Musk touted a $35,000 price tag that almost exactly mirrored the $34,944 average paid for a new vehicle at the time. Five years and a burst of inflation later, the Model 3 started at $46,990 as of early January, versus the $47,681 average in the US.
This floating-price strategy is unique among car companies, and was made possible by Musk's rejection of two century-old traditions. First, he eschewed the franchised dealership model, putting Tesla in control of the final price paid by customers. Second, he bucked the industry norm of setting prices at the start of each model year, then mostly keeping them static.
Early this year, though, the Model 3 began to bifurcate from average vehicle prices in dramatic fashion. Perhaps even more jarringly, the Model Y sport utility vehicle went from a starting price almost $20,000 above the typical transaction price to one below the industry average.
Contradictory as it may seem, Tesla is cutting its prices from a
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