Tesla hikes car charges in US as inflation bites

In response to ongoing global supply-chain issues and rising raw material costs, Tesla Inc hiked pricing for all of its car models in the United States once again.

After postponing certain long-range Model Y deliveries in the United States by up to a month, the electric automaker upped the long-range Model Y pricing to $65,990 from $62,990 on its website on Thursday.

The 5% price increase comes as raw material costs for aluminum and lithium, which are used in automobiles and batteries, rise, while automakers struggle to get chips and other supplies owing to an industry-wide scarcity.

According to Credit Suisse, the price increase is the fourth in the United States in 2022 in certain situations. “While some are afraid that price rises would kill demand, Tesla remains supply limited for the time being,” the brokerage added.

Elon Musk, the CEO of Tesla, has previously stated that lithium is to blame for rising costs and is “a limiting issue” in EV growth, urging carmakers to enter the lithium market.

Rival Rivian Automotive Inc has similarly boosted pricing for new orders of its basic model by more than $10,000.

Despite the price rises, Rivian Chief Financial Officer Claire McDonough said on Thursday at Deutsche Bank’s Global Auto Industry Conference that consumers were selecting for the most high-end vehicles.

“That’s leverage,” McDonough remarked, referring to the world of inflation and the price headroom he believes he has for his automobiles.

In their drive to catch up with Tesla amid rising demand, other automakers are anticipated to deliver electric cars to consumers for the first time.

In recent weeks, Musk, the world’s richest man, has cautioned about the possibility of a recession. He previously stated that he had a “very negative feeling” about the economy and that Tesla would have to reduce 10% of its workforce.

Musk, who is in the process of purchasing Twitter Inc for $44 billion, is set to speak to the company’s staff later on Thursday.

Tesla’s stock was down by approximately 9% on Thursday.

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