The real reason the Tesla Model 3 is now more expensive than ever

Electric vehicles are known to save owners substantial amounts of money they would otherwise spend on fuel and related costs, which is why they have become so popular in recent years. With fuel prices soaring, having a battery-powered ride seems like the best option, despite the higher upfront costs.


However, some brands continue to raise the prices of their electric vehicles. While we expected the ICE counterparts to get cheaper over time, some of them actually register unusually high prices. Take You’re here for example. The Model X, Model S, and Model 3 are all significantly more expensive now than when Tesla introduced them.

People particularly preferred the Tesla Model 3 for its original price of $36,000, but that was a while ago. Now, this EV starts at $46,990 for the base version and $62,990 for the performance. That’s quite a price for an EV, though the Model 3 is an admirable, fun performer with quick acceleration. Yet, that’s not even the biggest concern.

The question is, why does the price of the Tesla Model 3 keep rising these days?

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The Tesla Model 3 is now more expensive than ever due to the fluctuating economy

It’s not just that the Tesla Model 3 is now more expensive than before, but it shows an intention to continue this trend. Why is it so? Well, it has something to do with that word we often use these days – inflation.

Don’t worry, we won’t leave you with this terribly simple explanation that the Tesla Model 3 now costs more due to the diminishing purchasing power of money. Here’s an explanation of how the current state of the economy is influencing the price of the Tesla Model 3.

RELATED: Is the Tesla Model 3 Still a Bargain With a Price Increase?

Strong product demand drives up the price of the Tesla Model 3

The electric vehicle market is evolving and growing to accommodate new startups and new vehicles. Among the fierce competition, Tesla is holding up very well. The brand consistently records very high sales, which is one of the reasons why it has had to open waiting lists for its electric vehicles. Awesome, right? Well, not so much.

Indeed, those who want to have a Tesla car but missed their opportunity can now join the queue and get it, which is good news. But on the other hand, this increased demand for electric vehicles has an impact on prices. Unlike well-established automakers, Tesla has no production capacity to meet customer demand and must raise prices to make up for it.

The good thing is that Tesla plans to expand further and open new factories to meet the high demand for its vehicles. After the large production scale, the brand should be able to produce around 500,000 cars per year. Until then, however, there will likely be further price changes.

The impact of battery technology on the cost of the Tesla Model 3

Batteries are now essential parts of electric vehicles because they store and use the electrical energy you need for your journeys. They are also expensive because they use expensive components themselves, including metals like cobalt, nickel, lithium, and manganese for the cathodes, not to mention the long and demanding development process.

Today, Tesla aims to reduce the kilowatt-hour costs of batteries for their cars, but a lot of research and testing is still needed. In the meantime, the price of battery energy storage will continue to influence the total costs of Tesla and all other electric vehicles, including the Model 3.

Tesla Model 3 tax credits and prices

While the US government has introduced tax credit incentives to motivate less wealthy buyers to buy electric vehicles and automakers to expand their customer base, there are also caveats to consider. For example, electric vehicles must cost less than $55,000 (sedans) or $80,000 (SUVs, vans and trucks) to qualify for the $7,500 tax credit. Their batteries (and components) must also come from North America.

Therefore, not all Tesla cars are eligible for the tax credit, and those that are, such as the Tesla Model 3, must follow strict and potentially more expensive regulations to obtain it. You also have to meet certain requirements yourself if you want to get a tax credit, like being single and earning up to $150,000 or having a partner and joint income of up to $300,000, but we digress.

The gist of this story is that all Tesla cars, including the Model 3, are expensive due to global inflation, high customer demand but insufficient supply, and certain tax regulations. But it’s also good to keep in mind that the brand rates its rides highly for many other reasons. In the case of the Model 3, it does so because of its sleek styling, impressive specs, and high-end technology.

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