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

Published 06/16/2022, 02:42 AM
Updated 06/16/2022, 02:30 PM
© Reuters. FILE PHOTO: 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

© Reuters. FILE PHOTO: 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

(Reuters) -Tesla Inc 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 U.S. 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.

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 (NASDAQ:TSLA) 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 has also raised prices by more than $10,000 for new orders of its base model.

Rivian Chief Financial Officer Claire McDonough said on Thursday during Deutsche Bank (ETR:DBKGn)'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.

© Reuters. FILE PHOTO: 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

Musk, who is in the process of buying Twitter Inc (NYSE:TWTR) 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.

Latest comments

Wasn’t it Ponzi-Elon who were smacking his gums when Rivian raised their prices?
Congress should enact price freeze to control inflation without Fed's rate hiking. Realistically, this is no no. Recession, more likely depression is inevitable.
They havent yet cut the staff, seems to clearly be aimed at bringing down the ev company lols
In your imagination, just who is trying to bring down EV companies? Reuters? What motivation could they possibly have?
Did they actually cut those jobs?
He's just manipulating the markets like he always does. Easy shorts
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