Wed, 31 May 2023

Tesla raises car prices in U.S. due to inflation

Robert Besser
20 Jun 2022, 01:44 GMT+10

AUSTIN, Texas: Amidst ongoing global supply chain issues and surging raw material costs, Tesla has again raised the prices on all of its cars sold in the U.S.

This week, Tesla's website showed the price of its Model Y long-range increased from $62,990 to $65,990, with U.S. deliveries being delayed by up to one month.

The 5 percent price increase comes as automakers are struggling to source chips and other supplies, as well as due to industry-wide raw material price hikes, including for aluminum and lithium used in cars and batteries.

According to Credit Suisse, in some cases the Tesla price hike is the fourth in the U.S. in 2022, stating, "While some concerned price hikes will destroy demand, for now Tesla remains supply-constrained."

Lithium is the main cause for cost increases and "a limiting factor" to EV growth, encouraging carmakers to participate in the lithium business, Tesla Chief Executive Elon Musk said.

Rival Rivian Automotive has also raised prices by more than $10,000 for new orders of its base model.

During Deutsche Bank's recent Global Auto Industry Conference, Rivian Chief Financial Officer Claire McDonough said despite the price rises, customers were opting for the most high-end models.

"That's leverage, as we think about the world of inflation, and the pricing headroom that we believe we have for our vehicles," he added.

Musk, the world's richest person, said earlier this month that he had a "super bad feeling" about the economy and that Tesla needed to cut jobs by 10 percent. He has also warned this week about the risk of a recession.

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