Tesla ( TSLA Quick Quote TSLA - Free Report) recently announced the decision to raise the prices for its Model 3 and Model Y line-up.
The electric vehicle (EV) behemoth increased the price of both the Model 3 Standard Range Plus and Performance. Tesla's online configurator now shows the price of the base rear-wheel drive Model 3 Standard Range Plus as $41,990 instead of the previous $39,990. The starting price of the Model 3 Performance has also received a price hike from $56,990 to $57,990, while the price of the Model 3 Long Range remains unaltered at $49,990.
Similarly, the Model Y Long Range saw a price bump of $2000, from $52,990 to $54,990. The higher-level Model Y Performance is now priced at $61,990 compared to the earlier price of $60,990. This is not the first time Tesla has raised prices for its vehicles. Though the starting prices for both the Model 3 and Model Y were trimmed earlier this year, the same were again raised in July.
The latest $2,000-price bump for the base versions has ended up making Tesla vehicles significantly expensive in the United States. In fact, the Model 3 Standard Range Plus is now a whopping $5,000 more compared to its February price.
Meanwhile, at its annual shareholder meeting on Oct 7, Tesla CEO Elon Musk announced the decision to shift the company’s headquarters to Austin in Texas from Palo Alto in California. Musk cited several reasons for the move, telling shareholders its Californian factory in Fremont was jammed. Further, expensive housing in the Bay Area, long commute times and difficulty in scaling operations in the Golden State prompted this move. Musk had also moved to Texas last year to focus on two big priorities — SpaceX’s new Starship vehicle, under development on the Gulf Coast near Brownsville, and Tesla’s under-construction factory in Austin. Texas is Tesla’s third biggest market in the United States, after California and Florida. The state has no personal income tax or capital gain tax. Meanwhile, California imposes the highest personal income levies in the nation on its wealthiest residents and has capital gains tax as high as 13.3%. Thus, the move to Texas has both personal and business tax implications for Musk and his company. However, Tesla's latest decision does not mean it is bidding farewell to California. In fact, the company plans to further expand operations at its facility in Fremont in California by 50% in the future. Tesla's move from California does not come as much of a surprise. Musk had criticized California several times in earnings calls and public appearances, and had fallen out with local politicians in Alameda County, where Tesla's Fremont facility is based, over its COVID-19 related response. Founded in 2003, Tesla was initially based in San Carlos, CA. It shifted to Palo Alto in 2009, the year before its initial public offering. Tesla, peers of which include General Motors ( GM Quick Quote GM - Free Report) , Ford ( F Quick Quote F - Free Report) and Volkswagen ( VWAGY Quick Quote VWAGY - Free Report) , currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.