Tesla is in a bit of a pricing dilemma. After cutting the price of the Model Y and the Model 3, Tesla decided to increase the price of the Model S and Model X on April 20. 

This year alone, Tesla has dropped the price of the Model Y and 3 six times. The first four price chops were to make the cars eligible for the U.S. government’s $7,500 electric vehicle tax credit. This would give people more of an incentive to purchase a Tesla if they are looking for a new car. For all Model Y vehicles, customers are able to get up to $7,500 of tax credit. The Model 3 has different amounts for the type of version one gets. If the customer purchases the Model 3 Rear-Wheel Drive, they are eligible for $3,750 of tax credit while if they buy the Model 3 Performance, they can get up to $7,500 of tax credit. The amount of tax credit you are able to receive depends on your personal tax situation (Tesla). For the fifth and sixth reductions, the CEO of Tesla, Elon Musk,  said that one of the most relevant reasons why people don’t purchase Teslas is the high price. In a tweet from Twitter, Musk wrote, “There is plenty demand for our products, but if the price is more money than people have, that demand is irrelevant.”

The continuous decrease in the cost of electric cars contributed to the stock price of Tesla dropping almost 10% and missing its margin target. In response, Tesla hiked the prices of the Model S and X. In return for the sudden rise in price, Tesla is giving customers that buy the Model S or Model X three years of unlimited free Supercharging. Superchargers are what Tesla calls their electric car charger. It is specifically designed to charge Teslas at a rapid speed. To charge a Tesla from 0% to 100% costs around $25.

On May 1st, Tesla hiked their prices yet again. This time, they raised the prices of the Model Y and Model 3 by $250.

Despite the prices of all four models rapidly fluctuating, all Teslas have a starting price that is still 16% to 23% cheaper than what it was at the beginning of the year. As of the 1st of May, the Model Y base unit is $48,490, a big difference from the original price at the start of this year, $65,990. The Model 3 base unit started at $62,900 but is now $42,110. As for the Model S, it went from $135,990 to $113,140, and the Model X is now $99,550 when it was $120,990.

Ford Motor Co’s chief executive, Jim Farley, stated that Tesla’s more dynamic way of pricing electric cars would make it so other manufacturers would have to follow. Faith Saba (9) comments, “I think it will be interesting to see how these pricing decisions will affect Tesla and the rest of the electric car companies.” Making electric cars more affordable would lead to more people purchasing the vehicles, ultimately resulting in a healthier environment.