Tesla blames inflation, due to cost pressure from suppliers for rising car prices

Tesla blames inflation, due to cost pressure from suppliers for rising car prices

Tesla has raised vehicle prices due to expected cost pressures from suppliers and logistics over the next six to twelve months, the automaker said Wednesday in a statement in the first quarter of 2022.

Tesla CEO Elon Musk said, “We want to offer EVs at an affordable price. It’s very difficult with high inflation in 40 or 50 years. The official numbers really reduce the true magnitude of inflation. I thought I’d let you.” “In some cases, suppliers can increase parts costs by 20-30% from last year to the end of this year, so there’s a lot of cost pressure.”

Tesla also received this news as it expects a prolonged supply chain crisis to limit factory capacity and continue into the rest of the year.

In the first quarter, the automaker raised its suggested retail price for refillable models by about 5% to 10%. The automaker said the market would take a hit as demand continued to outpace supply.

“It doesn’t seem unreasonable for vehicle prices to rise, as we made record profits this quarter,” Musk said at a briefing with investors on Wednesday. The waiting list is until next year.

Tesla said it was not directly affected by rising raw material costs, but cost pressures could increase if current contracts with suppliers expire.

“Our contracts directly reflect the movement and prices of goods and raw materials,” Tesla CFO Zach Kirkhorn said at a briefing. “But when the contract expires, it has to be renegotiated, which can lead to delays in some cases.”

The automaker said prices would not continue to rise in the long term.

“Hopefully we don’t have to raise prices again,” Musk said. we are waiting for what price we think can increase the cost, and if that happens, I think the price will drop a little

“But we don’t control the macroeconomic environment,” he said. “The government continues to spend large sums of money, and unless the extraction and refining of lithium and other raw materials increases significantly, everyone will compete for raw materials in limited quantities, which is inevitable. This will be a high price.”

Despite these constraints, Musk is reluctant to delay the transition to sustainable energy, and the company can work with existing suppliers to accelerate the production of raw materials quickly.