Tesla shoppers are on a roller coaster. It’s the kind that goes around the track several times before letting you off.
Just one day after cutting prices on the least-expensive half of its lineup, the company has raised prices on the most expensive half.
Early yesterday, Tesla slashed prices on its Model 3 sedan and Model Y SUV. That move brought the entry price of Tesla ownership under $40,000 for the first time. Both of those cars also qualify for federal EV tax rebates — $3,750 off the cost of the base Model 3 and $7,500 off the cost of the Model 3 Performance and all versions of the Model Y.
Early this morning, the company went the opposite way with the rest of its lineup. It raised prices on its Model S sedan and Model X SUV. Each saw a price increase of $2,500. Both are too expensive to qualify for tax rebates.
Related: How Do Electric Car Tax Rebates Work?
The New Prices
| Model | Old Price | New Price | Discount | Federal Tax Rebate |
| Model 3 | $41,990 | $39,990 | -$2000 | $3,750 |
| Model 3 Performance | $52,990 | $52,990 | None | $7,500 |
| Model Y | $49,990 | $46,990 | -$3,000 | $7,500 |
| Model Y Long Range | $52,990 | $49,990 | -$3,000 | $7,500 |
| Model Y Performance | $56,990 | $53,990 | -$3,000 | $7,500 |
| Model S | $84,990 | $87,490 | +$2,500 | None |
| Model S Plaid | $104,990 | $107,490 | +$2,500 | None |
| Model X | $97,490 | $94,990 | +$2,500 | None |
| Model X Plaid | $107,490 | $104,990 | +$2,500 | None |
Buyers Happy, Investors Unhappy
Why the roller coaster? Tesla doesn’t make public statements about its price changes or operate a public relations department to field reporters’ questions. So we’re left speculating. But there is a lot of fuel for that.
Reuters reports, “Tesla Inc’s stock tumbled nearly 10% on Thursday after CEO Elon Musk signaled the electric vehicle maker will keep cutting prices to drive up demand, even after taking a painful hit to margins.”
Musk told investors, “We’ve taken a view that pushing for higher volumes and a larger fleet is the right choice here versus a lower volume and a higher margin.”
That may not just be about ensuring Americans see the Tesla logo around them in traffic. It may be about a future of subscription services. Many automakers plan to sell subscriptions to car features for monthly fees.
Deutsche Bank Analyst Emmanuel Rosner wrote in a client note this week that “the EV maker seems conceptually ready to give away its hardware in the near-term in hopes of richly monetizing its software in a more distant future.”
Tesla’s plan depends heavily on the controversial driver assistance software it calls Full Self-Driving. “It’s better to ship a large number of cars at a lower margin and subsequently harvest that margin in the future as we perfect autonomy,” Musk told investors this week.
More Teslas on the road now means more potential software downloads.
So Tesla appears to be doubling down on price cuts to its highest-volume models. Raising prices on the Model S and Model X could be an attempt to show investors that the company has heard their concerns while still keeping Tesla’s best sellers relatively inexpensive.
