Why Are Teslas So Expensive? Price Adjustments Explained

Elon Musk has often said that it is extremely hard to create and sustain a car company, nevermind an electric car company. They set out their company mission which partly was to “create a low volume car, which would necessarily be expensive“. Now they are in a position to decrease their prices of their lower end models, but it seems like they are only increasing. So, why are Teslas so overpriced?

Tesla originally catered to the high-end market. Now Teslas are very high in demand which allows them to push the price up. They have one of the best battery and autopilot systems on the market. Teslas can be relatively affordable when you consider how much money you will save in the long run.

This is a very simple explanation. To get the full picture you should take your time to read the full article below. Check it out and let me know what you think!

What Makes Teslas So Expensive

Tesla has been known for their advanced smart car technology since their release in 2008. However, they have also come to be known as extremely pricey over the years. So you might find yourself wondering why exactly this line of electric vehicles is so expensive. 

So let’s take a quick look at the most popular models of Teslas and how much they cost:

Tesla ModelTesla Model FeaturesAverage Model RatingTesla Model Cost 
Tesla Model SImmersive sound system Electric powertrain Optimized aerodynamics 360° cameras Vision detect GPS tracking Auto pilot9/10$99,990-$129,990.
Tesla Model 3Quick acceleration Dual motor 360° cameras Vision detect GPS tracking Auto pilot 8.5/10$46,990-$61,990.
Tesla Model XWireless gaming 17” (43.18 cm) cinematic display Electric powertrain 360° cameras Vision detect GPS tracking Auto pilot Extra seats falcon wing doors6.5/10$114,990-$138,990
Tesla Model Y Dual motor, range of 303 miles (487.63 km) 360° cameras Vision detect GPS tracking Auto pilot7.5/10$62,990-$80,000
This table shows the cost of the most popular Tesla models with average model rating and faetures.

As you can see, this table depicts the main features of the 4 models of Teslas currently on the market, the average customer satisfaction rating, and how much the most expensive to least expensive version of each model costs. 

On a related note, I wrote a detailed article and discussed how much money you can save when owning a Tesla. I compared all the models and went into detail! Check it out!

How much you spend on your new Tesla is highly dependent on which model you choose, what color you want, and any added features you wish to have included. For example, the reason a fully decked out Model X costs so much is because of its:

  • Advanced tech features
  • Extended drive range
  • Extra seating 
  • New falcon wing door design
  • Amount of upgrades available 
  • Overall performance rating

While the Model S is still up there in quality as far as Tesla Models go, this vehicle has similar luxuries to the Model X making it the next most expensive Model.

However the Model S can actually travel quite a bit further, 405 miles on a single charge compared to Model X’s 360 miles, but doesn’t have extra seating or falcon wing doors. 

Tesla’s prices seem extremely high, but the real question is how do their prices compare to other electric vehicles on the market?

Well, the average cost for Toyota’s best selling electric car, the Prius, comes in several different models with their most expensive one costing about $34,000. This price is drastically cheaper than most of the Tesla models besides the Tesla Model 3. 

So what exactly makes Tesla’s electric vehicles so much more expensive than the average smart car?

The Supply and Demand for Electric Vehicles

Like with any product, price is driven up when there is huge demand for a product of limited supply. One of the main reasons Tesla is able to charge so much for their vehicles is because everyone wants one and there are only so many to go around. 

If you don’t wish to wait on a list you can simply purchase a used one; however, you should be prepared to pay high prices since these vehicles tend to hold their value. 

I put an interesting article together where I examined Tesla’s yearly delivery projection accuracy. I compared the last seven years and you will get further insight into Teslas high demand and why they’re so expensive.

The Complicated Battery Technology Used

The most likely culprit of why Teslas cost so much to purchase is the battery used in these vehicles. Tesla uses lithium-ion batteries in their designs which are extremely expensive to make and maintain.

Fun fact:

In order to purchase a brand new Tesla, you must first be placed on a waiting list for up to 10 months before you will be able to purchase one? Crazy right? 

Not only are they expensive, they can also be dangerous since ion batteries are so complex to manufacture and have voltage limits that must be adhered to or there is a risk of a possible explosion.

On top of these batteries being so complex to make, Tesla has taken it upon themselves to make most of these batteries in house, thus adding more time to how long it takes to manufacture a Tesla. 

If you would like to understand a little more about why the cost of Teslas is so high, especially the cost of the batteries you should check out this YouTube video from The Infographics Show video on this subject. 

The Use of Quality Materials in Their Build

Tesla doesn’t cut corners when it comes to ensuring that the best materials are used in all of their builds.

From their sleek aluminum frames to their aerodynamic designs not a cent is spared when it comes to creating the most luxury electric vehicles.

These high end materials are a huge reason why Teslas cost so much and maintain their resale value. 

Did you know:

A lot of Tesla’s materials for their ion batteries actually have to be mined from places like Nevada for their lithium and Berlin and Shanghai for their cobalt. Tesla actually mines these materials themselves. 

All Tesla Research and Design Is Done in-House

Due to the nature of Tesla’s self-driving features and other security technology, they pride themselves in doing all of their research in-house.

However, this in-house research only manages to drive the prices of the vehicles up as they cannot cheaply outsource the work. That being said, in-house research adds a much needed level of security for these self-driving cars. 

Not to mention that Tesla is a relatively small company compared to some of the other car manufacturing companies out there. This means that it takes more time to complete each vehicle and therefore drives up the demand for this electric car. 

A Longer Vehicle Life Expectancy

Because of the use of quality materials in their build, Teslas are built to last longer than your average vehicle.

For example, the Toyota Pruis is built to last about 200,000-250,000 miles before giving out, while Tesla’s average lifespan is about 300,000 to 500,000 miles before expiring. 

The Use of Cutting Edge Technology in Their Vehicles

Not only does Tesla use high grade material and components in their electric vehicles, they also pride themselves in the cutting edge technology used in their one-of-a-kind cars. Sadly, this technology increased the pricing especially since most of its creation is done in house. 

Some of the technology features that drive up Tesla’s prices are:

  • Their advanced security system
  • 360° cameras
  • GPS Tracking
  • Vision detect system 
  • Self driving feature 
  • Rechargeable batteries in place of gas 

Each of these added features stack to create a costly electric vehicle price. 

What You Can Expect To Pay for Teslas in the Future

Prices for Teslas vehicles have steadily increased 5-10% in cost over the years. This is most likely due to the need for more fuel-efficient vehicles.

When the Tesla Model 3 first rolled out, Tesla promised that the car would be more affordable at just $35,000. However, once released, the new model cost closer to $45,000. So what exactly happened to that promised low price?

Well, technically the base cost of the Tesla Model 3 is only $35,000 but if you want that vehicle in any color other than black there is an additional $1,000 added to that price tag. Additionally, you will also have to pay another $1,000 docking fee and finally $9,000 for long range. Thus coming to about $45,000 to drive home your new electric car.

Tesla claims they are working on making vehicle models that will be more affordable in the future, but that has yet to be seen. Maybe with the Model 2? Who knows…

Frequently Asked Questions

How Much Is the Cheapest Tesla?

The cheapest Tesla is the Model 3 at just $48,490. Initially, this model was to be released at 35k. However, Tesla states that they are working on making their cars more affordable for the public.

How Long Is a Tesla Built To Last?

Tesla’s are built to last about 500,000 miles (~800 000 km) which is nearly double that of most vehicles. This slow deprecation also increases their resale value since they last longer than other cars.

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Why Are Teslas So Expensive? Price Adjustments Explained 1
Erwin Meyer
Erwin Meyer

Thanks for visiting evspeedy.com. The goal of this site is to be a helpful resource for Tesla and EV owners as this is where my passion lies. I was a TSLA shareholder before the hype and still am. I also believe in Tesla’s speedy mission to accelerate the world to a sustainable future.