Tesla to charge more for cars in US as inflation bites

16 June 2022 - 16:34
By Reuters
A Tesla EV is displayed in a Manhattan dealership in New York City.
Image: Spencer Platt/Getty Images A Tesla EV is displayed in a Manhattan dealership in New York City.

Tesla Inc again raised prices for all its car models in the US 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 (roughly R1,061,895) from $62,990 (roughly R1,013,301), its website showed on Thursday, after delaying the deliveries of some long-range models in the US by up to a month.

The 5% price hike comes as costs of raw materials of everything from aluminium to lithium used in cars and batteries surge, while automakers struggle to source chips and other supplies due to an industrywide shortage.

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

Tesla CEO 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 has also raised price by more than $10,000 (roughly R160,867) for new orders of its base model.

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 has warned about the risk of a recession in recent weeks. He had earlier this month said that he had a “super bad feeling” about the economy and that Tesla needed to cut 10% of jobs.

The world's richest person, who is in the process of buying Twitter Inc for $44bn (roughly R707.8bn), is expected to address the social media company's employees later on Thursday.

Shares of Tesla were down about 4% in premarket trading, tracking wider losses across markets.