Tesla increased the price of the base Model 3 in Germany by €7,000 ($7,678.44) over the weekend from just under €42,990 ($47,158.74) to €49,990 ($54,837.53).
The price hike follows a few other price increases in early March. Tesla raised the price of the Model 3 and Model Y Long Range variants in the United States and China before increasing the price of the Long Range and Performance Model 3 and Model Y in Germany. Recently, the base Model 3 in Germany also received a price hike of around 17%, putting it into the price range of a luxury car in Germany.
The price increase of the base Tesla Model 3 in Germany means potential buyers aren’t eligible for the highest electric vehicle subsidies from the government. Buyers who purchase an electric vehicle are eligible for up to €9,000 ($9,871.88) in subsidies, depending on the net price of the car they bought. EV subsidies are divided between the state and manufacturer.
For instance, for a €9,000 subsidy, the state’s share is €6,000 ($6,581.28) while the manufacturer’s share is €3,000 ($3,290.91). However, the updated price of the Model 3 in Germany makes it ineligible for the top €9,000 subsidy. For vehicles between the net price of €40,000 to €65,000 ($4,3881.96 – $71,303.38), the state subsidizes €5,000 ($5,485.94) and the manufacturer on contributes €2,500 ($2,743.00) in subsidies.
Base Model 3 customers will then lose out on €1,500 ($1,645.80) in subsides with the price increase. Stern calculated that the price increase of the base Tesla Model 3 in Germany makes the vehicle €8,000 ($8,777.60) more expensive, about 21% higher, considering the subsidies.
Tesla’s price increases were linked to the rising costs of raw materials like nickel for its lithium-ion battery cells. Last month, Tesla CEO Elon Musk warned of significant inflation pressure in raw materials and logistics. Even the Model S Plaid and Model X Plaid were not immune to the price hikes.