Tesla (TSLA) has increased the prices of its Model Y vehicles in the United States and China. Despite the domestic electric vehicle market facing demand challenges, the company has raised the price of its Model Y lineup by $1,000 in the US.

Yahoo Finance's Senior Autos Reporter Pras Subramanian breaks down the details, discussing the price hikes timed for after Tesla's first quarter this year and how CEO Elon Musk's behavior may be pushing potential customers away.

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Editor's note: This article was written by Angel Smith

Video Transcript

BRAD SMITH: Well, the electric vehicle pricing, the EV battle heating up here. Tesla raising the price of its Model Y cars. And that's ahead of its-- well, in both the US and China. And its Chinese competition is looking to capitalize as well, we should mention, offering incentives and price cuts to lure customers. Yahoo Finance's Pras Subramanian joins us now with the details. I almost said ahead of them putting out their own delivery and production numbers here, which we're, of course, expecting sometime this week.

PRAS SUBRAMANIAN: Yeah, tomorrow actually. Yeah. So I just want to note that these price cuts are not unexpected. They were going to happen after Q1 as they wanted to ramp up some of those incentives to get people to buy these cars ahead of the end of Q1. So we're not kind of surprised by these price hikes. They're only about 2% or so both in the US, China, and also Europe too.

In the US in particular, they're talking about how buy this car now before it goes up by $1,000 on April 1. So here we see that there for these Model Y trims in particular. But you know, I think there was expectation that would Tesla kind of maintain the current levels? Would they actually raise the prices by $1,000? They did. But then we'll see them probably cut that back in a few weeks as they want to gin up those sales in Q1. Sorry, Q2.

JARED BLIKRE: Yeah. Pras, I keep reading reports about Elon Musk and perhaps that he's losing a little bit of his cachet in the US. Consumers in general are not as attuned into the Tesla brand as they might have once been. And there are various surveys and I keep reading articles and opinion articles about it. Does Tesla, does Elon Musk still have the same draw that he did years ago?

PRAS SUBRAMANIAN: I think you're absolutely right. I mean, I just saw a report today from Reuters citing some Caliber data-- it's a research firm-- that showed that the Musk effect is real. It's sort of bringing down enthusiasm for the brand from potential buyers, noting that it's already a pretty tough environment to buy EVs right now.