Tesla to charge more for cars in United States as inflation bites

June 16 (Reuters) – Tesla Inc (TSLA.O) again raised prices for all its car models in the United States in response to persistent global supply-chain problems and soaring raw material costs.

The electric carmaker increased its Model Y long-range price to $65,990 from $62,990, its website showed on Thursday, after delaying US deliveries of some long-range models by up to a month.

The 5% price hike comes as costs of raw materials for aluminum to lithium used in cars and batteries surge, while automakers struggle to source chips and other supplies due to an industry-wide shortage.

Register now for FREE unlimited access to Reuters.com

Credit Suisse said the price hike represents in some cases the fourth one in the United States in 2022. “While some concerned price hikes will destroy demand, for now Tesla remains supply constrained,” the brokerage said.

Tesla Chief Executive Elon Musk has previously said that lithium is responsible for cost increases and “a limiting factor” to EV growth, encouraging carmakers to get into the lithium business.

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

Model Y cars are pictured during the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany, March 22, 2022. Patrick Pleul/Pool via REUTERS/File Photo

Rivian Chief Financial Officer Claire McDonough said on Thursday during Deutsche Bank’s Global Auto Industry Conference that customers were opting for the most high-end models despite the price increases.

“(That’s) leverage as we think about the world of inflation, and the pricing headroom that we believe we have for our vehicles,” McDonough said.

Several automakers are expected to deliver electric cars to customers for the first time in their race to catch up with Tesla amid growing demand.

Musk, the world’s richest person, has warned about the risk of a recession in recent weeks. He said earlier this month he had a “super bad feeling” about the economy and that Tesla needed to cut 10% of jobs. read more

Musk, who is in the process of buying Twitter Inc (TWTR.N) for $44 billion, is expected to address the social media company’s employees later on Thursday.

Shares of Tesla were down about 9% on Thursday.

Register now for FREE unlimited access to Reuters.com

Reporting by Nivedita Balu and Maria Ponnezhath in Bengaluru, additional reporting by Tina Bellon in Austin, Texas; Editing by Rashmi Aich, Arun Koyyur and Richard Chang

Our Standards: The Thomson Reuters Trust Principles.

.

Leave a Comment