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Tesla's Market Adjustment Of Model Y Raises Starting Price 44% In One Year

Here is why the starting price of a Model Y went from about $42K to over $60K in just 11 months.
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Tesla’s Model Y is a massively successful battery-electric crossover vehicle. We have no firm idea how many Tesla delivers in the U.S. market since Telsa won’t report its deliveries by market or by model. We suspect the number is someplace in the area of 10,000 to 20,000 units per month. Similar to the delivery volume of the known green crossover sales leader, the Toyota RAV4 Hybrid. What we do know is that the least expensive Tesla Model Y has risen from a price of under $42K to a price over $60K in under one year.

Related Story: Tesla's Model Y Is Now Outselling Every Crossover Model At These Major Brands

The $42K Tesla Model Y - February of 2021
The Model Y originally had a trim called the “Standard Range.” This was the Model Y trim that had the lowest cost. Tesla dropped that trim before delivering many as far as we can tell. In early January of 2021, less than 12 months ago, Tesla’s base price for the Model Y was $41,990. Don’t take our word for it. Take the EV advocacy publication Inside EV’s word for it. The outlet’s Editor in Chief, Eric Loveday reported this fact in February following the first price increase of the base Model Y. In its coverage of the change to the base Model Y price, Mr. Loveday wrote, “By eliminating the Standard Range RWD variant, the effective price to buy the cheapest version of the Model Y now increases by some $7,000, which is quite significant.”

Related Story: Tesla Model Y Costs You 50% More Than Hyundai IONIQ 5

Whether the Standard Range was simply a way of publishing and highlighting a low starting price we have no idea. In any case, the trim was dropped in favor of what is now called the “Tesla Model Y Long Range.” This is a weird name since there is no short-range, or normal range model from which to choose. It has a range of 315 miles vs. the Performance trim which has a 303-mile range. So the “Long Range,” is 12 miles “longer” than the only other option.

Tesla’s price increases over the past year were called “very frequent” in a story by Tesla advocacy publication Elektrek in November. The publication says that Tesla raised prices of the Model Y eight times in a year. In November, the publication reported on the latest Model Y price increase and implied that Tesla was raising the prices ahead of federal tax incentives that might be applied to Tesla purchases. In other words, due to pending taxpayer EV incentives, Tesla was raising prices to consumers.

Tesla’s Least Expensive Model Y Today
Following the discontinuation of the Standard Range, and the subsequent market adjustments to its prices Tesla has applied, the Model Y now has a base price with its standard wheels substituted for the cheaper smaller ones, in the color white, with no options, and no FSD as follows according to Tesla’s website:
Tesla Model Y LR AWD (5-passenger) vehicle cost $58,990
Tesla destination and delivery cost $1,200
Tesla order fee $250
Total consumer cost for cheapest Tesla Model Y = $60,440

Thus, the price reported by Inside EVs less than one year ago for the base Model Y of $41,990 has risen to $60,440. We confirmed the $41,990 price was real by communicating with an owner who showed us his actual purchase agreement. That price included the destination and delivery fee. We do know that the $250 order fee is new this past year.

Related Story: $10k to $20K Dealer Markups Now Common Due To Vehicle Shortage - Your Options

Tesla’s New Market-Adjusted Price For Model Y
The one-year market adjustment price of the least expensive Tesla Model Y has apparently risen by $18,450 or 44%. Like many brands’ crossovers, the out-the-door cost to buy the base Model Y from Tesla has jumped dramatically due to the current global inventory shortage and also in response to possible new government price supports. With traditional retail sales, dealers provided most of the market adjustment to the consumer cost in 2021. Tesla did it directly, and also added the new $250 order fee to accompany its destination and delivery costs.

Do you feel that Tesla increasing the base price of its Model Y by so much in one year is comparable to a similar price change by a traditional brand’s dealer network, or do you feel it is somehow more or less ethical? Tell us in the comments below.

Image of Tesla retail outlet by John Goreham

John Goreham is a long-time New England Motor Press Association member and recovering engineer. John's interest in EVs goes back to 1990 when he designed the thermal control system for an EV battery as part of an academic team. After earning his mechanical engineering degree, John completed a marketing program at Northeastern University and worked with automotive component manufacturers, in the semiconductor industry, and in biotech. In addition to Torque News, John's work has appeared in print in dozens of American news outlets and he provides reviews to many vehicle shopping sites. You can follow John on TikTok @ToknCars, on Twitter, and view his credentials at Linkedin

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