Inflationary Price Increase coming?

[Automobilist]

Dealers are selling at MSRP, and inflation will subside, may not be in 6 months, but just like the early 80's, this craziness will come to an end. I very much doubt, just like after the early 80s, that Tesla prices will drop.

I agree, there is no way would I buy another MY at this price. After owning my '20 MY since July of '20, purchased at $10K less, and have very much enjoyed the ownership, once non-Tesla inventory stabilizes, the competition is simply better priced for more features and higher build quality.

While I agree with you that "the craziness will come to an end". The key question for many people will likely be how long it takes for that to happen and what folks will end up going through before they get there. I distinctly remember my parents relating stories of paying more than 14% mortgage interest in the late 80's. Apparently those were the monetary brakes that were needed for a number of years to ultimately stop that episode of inflation.

I don't think Tesla is necessarily raising their prices in a bubble or out of proportion with market conditions. They have an almost 1 year backlog of orders (constrained supply relative to demand) and on top of that significant inflationary pressures looking ahead. I suspect that you will find similar increases elsewhere between updated MSRPs and dealers deciding to basically set their own prices especially if supply is similarly constrained.

 

[Daekwan]

SRMY
Mar 9 - $58,990
Mar 10 - $59,990
March 15 - $62,990

$4,000 increase in just one week!

Which buyer are you getting quotes from?

 

[Daekwan]

While I agree with you that "the craziness will come to an end". The key question for many people will likely be how long it takes for that to happen and what folks will end up going through before they get there. I distinctly remember my parents relating stories of paying more than 14% mortgage interest in the late 80's. Apparently those were the monetary brakes that were needed for a number of years to ultimately stop that episode of inflation.

I don't think Tesla is necessarily raising their prices in a bubble or out of proportion with market conditions. They have an almost 1 year backlog of orders (constrained supply relative to demand) and on top of that significant inflationary pressures looking ahead. I suspect that you will find similar increases elsewhere between updated MSRPs and dealers deciding to basically set their own prices especially if supply is similarly constrained.

Speaking of interest rates... Fed is set to start raising them today!

There's going to be some people paying $1,400 a month on a new Model Y.. behind the logic they will be saving money on gas.

 

[WhiteWi]

SRMY
Mar 9 - $58,990
Mar 10 - $59,990
March 15 - $62,990

$4,000 increase in just one week!

What is SRMY?

 

[MacO512]

While I agree with you that "the craziness will come to an end". The key question for many people will likely be how long it takes for that to happen and what folks will end up going through before they get there. I distinctly remember my parents relating stories of paying more than 14% mortgage interest in the late 80's. Apparently those were the monetary brakes that were needed for a number of years to ultimately stop that episode of inflation.

I don't think Tesla is necessarily raising their prices in a bubble or out of proportion with market conditions. They have an almost 1 year backlog of orders (constrained supply relative to demand) and on top of that significant inflationary pressures looking ahead. I suspect that you will find similar increases elsewhere between updated MSRPs and dealers deciding to basically set their own prices especially if supply is similarly constrained.

Yes I agree with this post.

We might see prices stabilize and even come down a small bit eventually. But first Tesla has to be able to scale more production, reduce the wait list, possibly introduce their new models (truck, semi, roadster, model 2, etc), see better competition from other manufacturers, and see better charging networks from other manufacturers.

Even if prices come down some, it would be much more slow to drop than the crazy $10-20k rapid hikes of the last year. We'd probably see $1k drop per 6 months over ~3 years. Or we just see lesser featured models introduced at lower price points.

So yes I'd say inflation will stabilize, prices will stop increasing so much. But even if inflation stabilizes, that doesn't mean it goes back to 2 year old prices. It just means it stops increasing so much per month going forward. We won't see prices ever go back to where they were over a year ago. So buying at current prices while not a great deal isn't a bad long term deal either. This is just the new normal.

 

[MacO512]

What is SRMY?

I assume s/he meant LRMY... those are the prices s/he listed

 

[AJ..]

While Tesla is a good car (and solid EV) even as a big Tesla and Elon fan, I’d say this - 63-66k for Model Y is totally not worth it. I have in the past advised most of my friends about Tesla and EV even though quality/price at most times don’t match up at all (FSD 12k a joke, “premium” interior, road noise esp pre 2021 models, uff that handle!) — switch to EV given the maintenance with ICE is actually no brainer. I 100% agreed with Elon’s 2019 talk (buying ICE is dumb given where EVs are). But…… 12k FSD, almost ~11-15k price increases over 2-3 years, nickel diming like “premium connectivity” - I would advise either to hold off on the switch, or go all out for alternate EV options. May be we are 2-3 years away from true EV era. VW, Hyundai esp. with better range, and better charging networks will likely (and unfortunately) trip up Tesla in EV race even with “Gigacast” noise.

I’d love to hear from more experienced folks around - given the “inflationary pressure” talk from Elon - if the war situation changes in a weeks’ time (say Mar 3rd week ‘22) and optimistic news comes out of long lasting peace (pray and wish for that irrespective of anything that else TBH) - would Elon/Tesla rollback Tesla price hikes at the same rate? (more around precedents in car industry, or practical business likelihood). Is that morally how it should be/has ever been?

This whole price hike (rather suddenness of it) is interesting and somehow doesn’t connect well with Elon’s public personality/comments. I totally get the business perspective, but even 5k-6k price hike year or so back (not sure if it was actually in anticipation of Federal EV rebate to be restarted) did not seem justified from user perspective. Better reasoning from very active Elon on web/Twitter will go a long way to long term Tesla customers.

 

[BMWY]

The only way the latest price jump makes sense to me, is if they've already determined that all new orders placed will receive a new featureset (casting, 4680, what have you). In that context, it would at least make some sense. Otherwise, it just seems like a cash grab.

 

[Corndart]

Speaking of interest rates... Fed is set to start raising them today!

There's going to be some people paying $1,400 a month on a new Model Y.. behind the logic they will be saving money on gas.

Hot take - anyone buying a Tesla solely for gas savings over an ICE vehicle is not doing an objective and clinical analysis to justify their purchase. But we're way off topic.

Look at those price increases!

 

[stevesark]

I thought MYP at $63k might be a good upgrade for my 2019 Model 3 at some point, but not $67k. At this point, I'll baby my Model 3 as long as humanely possible. Even worst worse case of paying out of pocket for a battery failure at $15-20k seems like a bargain by comparison!

 

[PackMan730]

I ordered my 2nd MYP right before the price hike. Lol

 

[loanchau2k]

VW, Hyundai esp. with better range, and better charging networks will likely (and unfortunately) trip up Tesla in EV race even with “Gigacast” noise.

I agree with competition in EVs, more traditional car manufacturers will take market share from Tesla for sure, it's just a basic math. I do agree also they make better car, but not EV, Tesla is still leading the EV race by wide margin. When I say EV, I mean the whole experience of online buying, software update, battery, charging, I think Tesla is way ahead. Those car manufactures still believe in the middle man, the dealers, is beyond my comprehension. Not only they have to share the money with dealers, but also they don't understand that car buyers really hate dealers. All the potential saving "dealer money", Tesla will invest that to improve its software, hence it keeps getting better. My friend, ordered March-e online from Ford, he said it was a joke. It gave hime more headache, since he still needed to go thru dealers.
The way I see is this. Tesla just focus and all energy in one area, EV. Where as traditional manufacturers need to put focus on ICE and EV at the same time. To me, you will lose that edge.

 

[stevesark]

but also they don't understand that car buyers really hate dealers

Spot on! The BMW i4 caught my eye when it was announced, but then I thought "dealers" and "dealer markup" which I'm sure will be at least as much as markup on the Mach-E. Forget about it!

 

[wandl]

While Tesla is a good car (and solid EV) even as a big Tesla and Elon fan, I’d say this - 63-66k for Model Y is totally not worth it. I have in the past advised most of my friends about Tesla and EV even though quality/price at most times don’t match up at all (FSD 12k a joke, “premium” interior, road noise esp pre 2021 models, uff that handle!) — switch to EV given the maintenance with ICE is actually no brainer. I 100% agreed with Elon’s 2019 talk (buying ICE is dumb given where EVs are). But…… 12k FSD, almost ~11-15k price increases over 2-3 years, nickel diming like “premium connectivity” - I would advise either to hold off on the switch, or go all out for alternate EV options. May be we are 2-3 years away from true EV era. VW, Hyundai esp. with better range, and better charging networks will likely (and unfortunately) trip up Tesla in EV race even with “Gigacast” noise.

I’d love to hear from more experienced folks around - given the “inflationary pressure” talk from Elon - if the war situation changes in a weeks’ time (say Mar 3rd week ‘22) and optimistic news comes out of long lasting peace (pray and wish for that irrespective of anything that else TBH) - would Elon/Tesla rollback Tesla price hikes at the same rate? (more around precedents in car industry, or practical business likelihood). Is that morally how it should be/has ever been?

This whole price hike (rather suddenness of it) is interesting and somehow doesn’t connect well with Elon’s public personality/comments. I totally get the business perspective, but even 5k-6k price hike year or so back (not sure if it was actually in anticipation of Federal EV rebate to be restarted) did not seem justified from user perspective. Better reasoning from very active Elon on web/Twitter will go a long way to long term Tesla customers.

Tesla (and fellow EV-only companies like Rivian/Lucid) can change pricing anytime, whereas traditional manufacturers (Ford, Hyundai etc) are usually more "locked in" on their pricing strategies. A 2022 F150 Supercrew that MSRP's for $46,850, will remain at the same MSRP till 2023, even if the cost to build that truck has gone up 30%.

All this to say anticipate the steel/nicke/supply chain issues to be reflected in 2023 MSRP pricing. It won't be as steep as a $12k jump, but if Ford sees a $2k increase to cost, that will be reflected in their MSRP as soon as they can.

TLDR: changes in cost impact everyone; Tesla just can change their pricing anytime. OEM's like Ford will raise their prices as soon as they can, which for now is the 2023 model.

 

[blinkme323]

Spot on! The BMW i4 caught my eye when it was announced, but then I thought "dealers" and "dealer markup" which I'm sure will be at least as much as markup on the Mach-E. Forget about it!

Yep, my local BMW dealer, from whom I've purchased many vehicles, offered their i4M50 allocation to me for "only" 20k over sticker.

 

[loanchau2k]

Tesla (and fellow EV-only companies like Rivian/Lucid) can change pricing anytime, whereas traditional manufacturers (Ford, Hyundai etc) are usually more "locked in" on their pricing strategies. A 2022 F150 Supercrew that MSRP's for $46,850, will remain at the same MSRP till 2023, even if the cost to build that truck has gone up 30%.

All this to say anticipate the steel/nicke/supply chain issues to be reflected in 2023 MSRP pricing. It won't be as steep as a $12k jump, but if Ford sees a $2k increase to cost, that will be reflected in their MSRP as soon as they can.

TLDR: changes in cost impact everyone; Tesla just can change their pricing anytime. OEM's like Ford will raise their prices as soon as they can, which for now is the 2023 model.

Supply and demand, my friend. There is no such thing they have to "locked in" rule. If they have demand and no competition, they will increase the price. Ford will have no issue to increase price 50% for F150 if they have huge backlog orders. Although I do agree with you that they rarely increase prices weekly/daily like Tesla. It's crazy

 

[loanchau2k]

Yep, my local BMW dealer, from whom I've purchased many vehicles, offered their i4M50 allocation to me for "only" 20k over sticker.

That was my main point, traditional manufactures can't compete with Tesla with dealer model. Perfect proof right here, BMW just lost 1 sale and 1 buyer, @blinkme323 because of dealers

 

[dagug]

I agree with competition in EVs, more traditional car manufacturers will take market share from Tesla for sure, it's just a basic math. I do agree also they make better car, but not EV, Tesla is still leading the EV race by wide margin. When I say EV, I mean the whole experience of online buying, software update, battery, charging, I think Tesla is way ahead. Those car manufactures still believe in the middle man, the dealers, is beyond my comprehension. Not only they have to share the money with dealers, but also they don't understand that car buyers really hate dealers. All the potential saving "dealer money", Tesla will invest that to improve its software, hence it keeps getting better. My friend, ordered March-e online from Ford, he said it was a joke. It gave hime more headache, since he still needed to go thru dealers.
The way I see is this. Tesla just focus and all energy in one area, EV. Where as traditional manufacturers need to put focus on ICE and EV at the same time. To me, you will lose that edge.

Manufacturers still use the dealer model because they can outsource the entire headache of the sales process by outsourcing it. They cut out that entire segment of the product life cycle to focus more on production. Yes, they get less in return since the dealers take a cut... yes, customers hate it... but as of right now, this is still the standard and if everyone (except tesla) is doing it... well, sucks to be the consumer but take it or leave it. With traditional manufacturers, their EV sales are still only a fraction of their entire portfolio so there's no sense in pissing off their dealers over the relatively small (for now) EV market and taking on all the sales/regulatory headaches.

And it's mostly human psychology... better the devil you know than the devil you don't (even if it's an outdated and losing model).

 

[MacO512]

Manufacturers still use the dealer model because they can outsource the entire headache of the sales process by outsourcing it. They cut out that entire segment of the product life cycle to focus more on production. Yes, they get less in return since the dealers take a cut... yes, customers hate it... but as of right now, this is still the standard and if everyone (except tesla) is doing it... well, sucks to be the consumer but take it or leave it. With traditional manufacturers, their EV sales are still only a fraction of their entire portfolio so there's no sense in pissing off their dealers over the relatively small (for now) EV market and taking on all the sales/regulatory headaches.

And it's mostly human psychology... better the devil you know than the devil you don't (even if it's an outdated and losing model).

As big as Tesla has become, they sold much less cars than Toyota/Ford/others in the last year, having something like only 2% of the US auto sales in 2021. But their buying experience without dealers is way better. Maybe when supply chain improves Tesla can ramp production to one of the top spots. That will start to build more pressure on Toyota/Ford/others to match the dealerless experience.

Tesla has become worth more than basically all the other auto makers combined. They have very strong profits, cash, demand, vertical integration, economies of scale, and well engineered products to possibly ramp production way way up in the years ahead, if it makes sense.

If the other auto makers give consumers shitty options we could end up with Tesla having an iPhone level market share, matching basically all other brands combined. That's probably something like 25x the sales as what tesla has previously had, and all the other US auto makers losing basically half their sales. Add on to that brands like Rivian, Lucid, Chinese EV's, even the iCar. Traditional auto makers have a lot of risks coming for them.

I'd be happy to see most dealerships go away as has happened to picture film, newspapers, cable TV, and other industries that seemingly overnight became obsolete. I've never thought a car dealership provides more value or enjoyment to my vehicle experience.

 

[Yelobird]

NOT saying price increases are fun or fair but to some that point this out as a Tesla plan or strategy I don’t follow. EV cars in this volume consume a crap ton of exotic materials that are hitting all time world costs. Aluminum as an example (most of a Tesla) is up 40% over a year and only going up as they Were getting a large amount from Russia for all these castings, parts, and panels. Not so easy to replace a supplier like that at budget prices. Everything is going up in price. Find a forum about a product that doesn’t have the Same complaint.