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Why is Tesla Expensive?

Why are Tesla Cars Still So Expensive?

Many car enthusiasts consider Tesla the car of the future. When Elon Musk released the first roadster in 2008, he aimed to produce an affordable and reliable electric vehicle that would compete with fossil fuel alternatives. 

However, Tesla prices are still considerably higher than most people can afford. So why are they still so expensive?

After some digging and fact checks, I can conclude that Teslas are primarily expensive because of the costly electric vehicle (EV) battery technology. Although Tesla batteries are continually evolving, they are still not affordable. Other factors such as the ongoing chip shortage, fuel prices, and massive demand have also contributed to high Tesla prices.

This article looks at the reasons behind high EV prices in 2022, particularly the Tesla. Keep reading to find out the in-depth reasons why Tesla cars are still so expensive.

Are Tesla Cars Expensive Right Now?

Even with the federal electric car tax credit of $7500, Teslas are still out of most people’s reach. In 2022, it’s cheaper to buy a gas-powered family sedan than a base Model 3. 

It’s also cheaper to buy a luxury SUV like the 2022 Cadillac Escalade than the base Tesla Model X.

How Much is the Most Expensive Tesla?

Expensive Tesla
Tesla Model S

The most expensive Tesla in 2022 is the model S plaid, which costs $131,000 before shipping. The plaid Model S is currently the fastest electric vehicle by acceleration, with a 0-60mph time of under 2 seconds.

There’s such a high demand for the plaid model S that even if you ordered one today, it might take some months or even a year before it’s delivered.

How Much is the Cheapest Tesla?

Cheapest Tesla
Tesla Model 3

The cheapest new Tesla in 2022 is the model 3. Released in 2017, the model 3 was supposed to be an affordable electric family sedan. However, Tesla didn’t achieve this with the base trim, two-wheel-drive, starting at $41,940.

With options, the performance version of the model 3 can cost upwards of $70,000! This is a far cry from Tesla’s vision of an affordable car for low and middle-income families. For comparison, a base Toyota Corolla has an MSRP of $20,025.

Why Are Tesla Cars So Expensive?

Tesla has made an EV future more realistic in the past decade. The company has achieved tremendous milestones both as an automotive manufacturer and tech company. 

But why are their cars so expensive?

High Demand

The global demand for EVs in 2022 is higher than ever. When the first Model S was released in 2012, people were skeptical about the future of electric cars. There was a limited charger network, and nobody knew if these cars were safe or reliable.

A decade later, Tesla has created a country-wide charger network, improved their vehicles for longer battery ranges, and provided excellent after-sales support. At this point, there’s little doubt about the future of EVs.

Expensive Tesla
A Tesla Charging Point: Image by Urs Widmer from Pixabay

Although alternative EVs like Lucid and Rivian are gaining popularity, Tesla is still the clear choice. The new players also have such a limited production capacity that they don’t really threaten Tesla’s dominance at this point.

Therefore, there’s such a massive demand for Teslas that it’s impossible to order one and get it delivered within a month. As a result, Tesla has no incentive to lower its prices.

The Chip Shortage

One of the biggest challenges facing the auto industry in 2022 is the global chip shortage. While all modern cars require microchips to operate, EVs need them more.

Teslas use microchips for everything: to control the motors, air conditioning, infotainment system, and even power management. 

Therefore, even though Tesla has an efficient supply chain, the global shortage has affected its production capacity.

Fuel Prices

In the past decade, gas prices have been on an upward trajectory. Every time there’s a global crisis, fuel prices hike and remain high even after it’s over. Recently, the ongoing conflict in Eastern Europe has seen gas prices rise unexpectedly.

This inconsistency in fuel prices pushes many gasoline-powered car owners toward the EV market, creating an insatiable demand. 

Tesla is overwhelmed and has to keep car prices high to get enough finances to grow its production capacity.

Expensive Battery Technology

Tesla is a global leader in EV battery technology. The company has worked on improving lithium-ion batteries for more than a decade. Although battery technology continuously evolves and improves, it’s still not affordable.

Costly Ev batteries are the primary reason Teslas and all other EVs are expensive. Until a cheaper but equally efficient battery technology is found, Tesla prices will remain high.

Read Also: Why are Electric Car Batteries So Expensive?

So, Why is Tesla So Popular?

Despite the high prices, Tesla continues to be in massive demand. Ironically, some of the reasons that make Tesla cars so popular also make them expensive. Here’s why Tesla is so popular in 2022:

  • Reliability: Teslas have proven that electric motors can be more reliable than combustion engines. They require little maintenance and start every time as long as the battery is charged up.
  • Technology: Sitting in a Tesla’s cockpit is like a peek into the future. Tesla cars have futuristic, minimalist designs and are packed with nifty tech features. Teslas also lead in many futuristic automotive technologies like autopilot, summon mode, and vehicle operating systems.
  • Long ranges: Although there are several EV manufacturers in the market, none of them can claim to have better batteries than Tesla. Battery technology has been at the center of Tesla’s business model, and they’ve spent billions of dollars on research and development.

Is Buying a Tesla Worth It?

If you can afford a Tesla in 2022, it’s definitely worth it. Although they’re pretty expensive compared to similar gasoline-powered cars, Teslas are reliable and offer a wide range of unique technologies.

Fuel prices are also likely to keep rising, so getting a Tesla might save you money in the long run.

Will Tesla Cars Become More Affordable in Future?

As proven by the events of the past 2 years, no one can predict the future. However, judging by the look of things, Teslas are likely to become more affordable in the next couple of years.

Most governments are trying to reduce carbon emissions by actively promoting EVs. Being the industry leader, Tesla will most likely see increased government support in tax breaks and grants. This will reduce the company’s cost of production and, consequently, the price of their cars.

Fuel prices are also likely to keep getting out of hand, forcing traditional car companies to start making EVs. This will create much-needed competition in the sector and bring the prices down.

3 thoughts on “Why are Tesla Cars Still So Expensive?”

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