Elon Musk Says Tesla Price Increases Are Result of Supply Chain Issues

Kimberly Redmond  |

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After multiple price increases for Tesla Inc’s popular Model 3 and Model Y, chief executive officer Elon Musk finally addressed the matter, saying they have to do with the supply chain issues across the auto industry.

Since February, Tesla has incrementally raised prices five times and provided no comment on the changes. Musk finally broached the topic Monday when he replied to Twitter user @Ryanth3nerd, who had written that he didn't like “the direction Tesla is going raising prices of vehicles but removing features like lumbar for the Model Y.”  

Musk wrote that Tesla removed the lumbar support feature only for the front passenger seat because logs showed it was barely being used. 

He went on to address the recent series of price changes, writing, “Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially.”

After Tesla’s most recent pricing update last week, a Model 3 Standard Range Plus, the company’s cheapest vehicle, has increased from $37,000 in February to $40,000 currently, while the cost of the Long Range AWD version has gone from $46,490 to $48,990. 

Meanwhile, the price of a Model Y Long Range AWD has risen from $51,490 to $51,990. Electrek noted that a few months ago, the car was selling for less than $50,000.

During the Q1 earnings call in April, Musk explained that Tesla had experienced “some of the most difficult supply chain challenges,” citing the global chip shortage, but also said the company was “mostly out of that particular problem,” Reuters reported.

In recent months, global supply chain issues for raw materials have impacted numerous industries, and the rising cost of raw materials, energy and transportation has forced company executives to find ways to offset the increases, according to The Wall Street Journal.

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Source: Equities News

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