Tesla blames inflation and cost pressure from suppliers for rising car prices – TechCrunch

Tesla has raised prices on its vehicles as it anticipates cost pressures from suppliers and logistics over the next six to 12 months, the automaker said Wednesday during its first-quarter 2022 earnings call.

“We absolutely want to make EVs as accessible as possible. It’s been really tough with inflation at a 40- or 50-year high, and I think the official numbers really underestimate the true magnitude of inflation,” said Tesla CEO Elon Musk. “In some cases, we are seeing suppliers request cost increases of 20-30% for parts from last year through the end of this year. So there is a lot of cost pressure there.”

The news comes as Tesla also said it expects a protracted supply chain crisis to limit production capabilities at its factories that will continue for the rest of the year.

During the first quarter, the automaker increased the MSRP on its battery-electric models by about 5% to 10%. The automaker says the market will support it, as demand continues to outstrip supply.

“It might seem like we may not be being reasonable in raising the prices of our vehicles as we’ve had record profitability this quarter,” Musk said during Wednesday’s investor briefing, “but the waiting list for vehicles is quite high. long, and some of the vehicles that people are going to order, the waiting list stretches into next year.”

Tesla said it is not immediately affected by the rising cost of raw materials, but that cost pressures could increase when its current contracts with suppliers expire.

“Our contracts directly reflect the movement and prices of commodities or raw materials,” Zach Kirkhorn, Tesla’s CFO, said during the briefing. “But as those contracts expire, we have to renegotiate them, so there could be a delay in some cases.”

The automaker says its prices are unlikely to continue rising in the long term.

“We hope we don’t have to raise prices further,” Musk said. “Current prices are anticipating what we think is likely cost growth. And if it does come to fruition, we estimate slightly lower prices.”

“But we don’t control the macroeconomic environments,” he added. “Governments continue to print large amounts of money, and if there are no significant increases in the extraction and refining of lithium and other raw materials, so that everyone is competing for a limited amount of raw materials, then obviously this will drive prices to levels tall”.

Musk said Tesla is unwilling to delay the transition to sustainable energy, even in the face of such restrictions, and that the company is working with existing suppliers to determine how to accelerate production of raw materials as quickly as possible.

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