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Tesla Vehicle Prices Increase As Supply Chain Pressures Exacerbate Inflation

On Monday, Elon Musk, CEO of Tesla (NASDAQ:TSLA) responded to a tweet and revealed that the recent increases in the prices of certain Tesla vehicles was due to "...major supply chain price pressure industry-wide. Raw materials especially."

Earlier this month, Tesla had increased prices on its Model 3 and Model Y cars. This had been the fifth time the prices of Tesla's vehicles had increased just within a few months. In a conference call in April, Musk had explained how the company was going through extremely difficult supply chain challenges at the time, as Tesla was also bearing the effects of the global semiconductor chip shortage and as a result, impacting many of Tesla's manufacturing goals.

On Saturday, Musk also announced that the delivery date for Tesla's Model S Plaid was pushed back by one week, now being delivered on June 10th instead.

However, due to these shortages, Tesla has been in talks to pay for computer chips in advance, as well as potentially seeking vertical integration by purchasing a plant. Some contract chipmakers have started to allow larger customers to pay upfront for a guaranteed order of a certain size, which is likely what Tesla will choose in the future.

The shortage of computer chips is expected to cost the global auto industry around $110 billion this year as many major car manufacturers have been hit by supply chain issues due to the pandemic. According to Intel’s CEO, the global chip shortage and its effects could last for several years as the chip manufacturing industry slowly adapts to addressing the shortages in capacity and components.


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