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Tesla raises the price of its Model Y SUV in U.S.

Yahoo Finance’s Pras Subramanian joins the Live show to break down Tesla’s Model Y price hike.

Video transcript

[AUDIO LOGO]

RACHELLE AKUFFO: It's been a busy couple of weeks for Tesla on the pricing front. The EV market leader has adjusted prices yet again. Let's get the current landscape with Yahoo Finance's Pras Subramanian. More changes here, Pras.

PRAS SUBRAMANIAN: Yeah, Rachelle, you know, this as Tesla just ramming through some price hikes, after Friday's IRS ruling that they allowed to change the-- what an SUV classifies for, for the EV tax rate. Now, using an $80,000 or higher MSRP cap that they can take advantage of.

So the most recent Tesla price hikes here are for the Model Y Long Range, up nearly $1,500 to almost $55,000. And then the Model Y Performance by $1,000 to nearly $58,000. Those are the new pricing for those two models.

Now, these hikes come after these big price cuts last month where, you know, Tesla wanted to make that Model Y more competitive because it didn't qualify for these EV tax credits. You know, Musk said in the earnings call that demand was outstripping supply. You see the demand sort of improving both here and in China and places like that. So they're able to hike up, as long as they can hit that $80,000 price cap, you know?

But the key here, though, I think, Rachelle, is that even though Tesla is doing this and Ford sort of matched them, there's no real price-- or EV price war just yet. You have GM, Volkswagen, and Kia talking about how they want to keep their prices where they're at-- where they're at. They think that they're competitive there. So they may not have to raise prices just yet in order to match Tesla.

RACHELLE AKUFFO: You have to wonder, though-- because I remember when they cut prices in China after people had already bought their cars, there was a lot of backlash, you know, people complaining at some of the-- outside some of the factories and things. Should we just get used to some of these like quick sort of on-the-fly price adjustments from Tesla?

PRAS SUBRAMANIAN: Yeah. And they've been-- it's not-- it's not like they haven't done this before. They're able to do this because they can in real time change their price on their website, whereas most automakers they ship a vehicle with their Monroney sticker or window sticker, and that's already set. And they maybe change prices a couple of times a year.

Tesla can dynamically do this whenever they feel like it. So for buyers, you don't really know what the price is unless you lock it in when you order those models. So I think for them, it's an advantage. But then it can also be a disadvantage when buyers feel, sort of, that they're being taken advantage of by not being-- by Tesla not being upfront about what their long-term pricing strategy is.

RACHELLE AKUFFO: Well, at least investors are encouraged today. Seeing the stock price up today. Great stuff there. Thanks to Yahoo Finance's Pras Subramanian.