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The world is currently experiencing an unprecedented rate of inflation brought about by the COVID-19 pandemic shutdown.
The two main ways COVID-19 has caused inflation are, first, the pandemic shutdown caused a lot of manufacturers to halt production and the ensuing supply chain disruption has yet to return to pre-COVID states.
Second, as the economy shut down, central banks all around the world were forced to print money to hand out stimulus cheques or generally stimulate the economy in one way or another.
For example, 40 percent of the entire world’s supply of the US dollar was created in the last two years. So all this new money together with a fall in production has caused prices of goods and services to go up.
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Responding to this macroeconomic pressure, in the last 2 years, Tesla has been forced to gradually increase the prices of its vehicles. And these price increases, when added together, for some Tesla models, like the Model S AWD, add up to a 50% price bump.
The Rear-Wheel-Drive Model 3, which used to have a starting price of $36,000, now starts at a whopping $48,500 before adding any bells and whistles.
Similarly, all trims of the Model Y have seen price increases, and the all-electric crossover now starts at $68,000, up from a prior starting price of $44,000.
All these price increases have meant, that the Model 3 & Model Y. which were supposed to be mass market vehicles have now become unattainable for the majority of households in the US.
Tesla is still managing to sell as many vehicles as it can produce so all the price increases haven’t slowed down the EV maker yet. However, in the long run, Tesla’s stated mission is to accelerate the world’s transition to sustainable energy, and seen through that lofty goal, Tesla is falling short of its mission.
However, lucky for anyone looking to buy a Tesla, CEO Elon Musk has come out and said there is a chance that Tesla might lower the prices of its vehicles. Musk’s statement came in response to a Twitter user who asked “ any plans to down the price of [Tesla] cars after pandemic or supply chain matters?”
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In his response Musk said, “if inflation calms down, we can lower prices for cars.” This is great news for anyone on the fence about placing his/her Tesla order.
If inflation calms down, we can lower prices for cars— Elon Musk (@elonmusk) July 15, 2022
Since the lead time between making an order and delivery for a Tesla is so long, reaching up to more than a year for some variants, people can hold their place in line as they wait for the macroeconomic environment to improve which will allow Tesla to cut prices.
In the short term, the chances of inflation going down at least in the US don’t look too good. According to data released recently, inflation hit a record 9.1% year over year in the month of June.
However, in the past few weeks, commodity prices have started to come down signaling that perhaps June might be peak inflation.
Still, these price cuts are too early to say inflation will go one way or the other. However, we will be sure to keep you posted as the macroeconomic environment changes and Tesla adapts its prices.
Until then, make sure to visit our site torquenews.com/Tesla regularly for the latest updates.
So what do you think? Excited to learn that Tesla might be lowering the price of its vehicles? Also, would you get a reservation for a Tesla in the hopes of getting a lower price by delivery? Let me know your thoughts down in the comments.
Image: Courtesy of Tesla, Inc.
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Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.
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