Tesla to charge more for cars in the US as inflation bites

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The 5% price hike comes as costs for raw materials ranging from aluminum to lithium used in cars and batteries rise, while automakers struggle to source chips and other supplies.

Tesla Inc has again raised prices for all its car models in the United States in response to ongoing global supply chain issues and soaring raw material costs.

The electric carmaker has raised the price of its long-range Model Y to $65,990 from $62,990, its website said Thursday, after delaying U.S. deliveries of some long-range models by up to a month.

The 5% price rise comes as raw material costs from aluminum to lithium used in cars and batteries rise, while automakers struggle to source chips and other supplies due to an industry-wide shortage.

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

Tesla Chief Executive Elon Musk has previously said lithium is responsible for rising costs and “a limiting factor” in the growth of electric vehicles, encouraging automakers to jump into the lithium business.

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

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Rivian’s chief financial officer, Claire McDonough, told Deutsche Bank’s global auto industry conference on Thursday that customers are opting for the higher-end models despite price increases.

“(It’s) leverage as we think about the world of inflation and how much leeway we think 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 rising demand.

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

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Musk, who is in the process of buying Twitter Inc for $44 billion, is expected to speak to employees at the social media company later Thursday.

Tesla shares were down about 9% on Thursday.

(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)

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