Elon Musk explains why Tesla prices are soaring
Elon Musk explains why Tesla prices are soaring

Last week, Tesla raised the price of the Base Model 3 from $2,000 to $39,990.

Additionally, the electric car maker increased the price of the Model Y from $5,000 to $51,990.

When a Tesla fan asked about the price increase via Twitter, CEO Elon Musk replied that the price increase was beyond his control.

He wrote on Twitter: "Prices are going up due to significant industry-wide price pressure in the supply chain. Raw materials are very special.

Prices of new and used cars have risen to all-time highs across the industry.

This is usually attributed to high demand and lack of auto sales due to factory closures due to lack of computer chips.

Tesla didn't produce any more expensive models, specifically the Model S and Model X, in the first quarter because it focused its chips on the Model 3 and Model Y.

It has not resumed vehicle delivery despite its renewed commitment to resume delivery of the Model S as soon as possible.

Tesla suffered from price hikes:

It should be noted that computer chips are not the only commodities affected by scarcity and high prices.

Lithium is an essential material used in electric car batteries and has doubled its commercial price.

The price of cobalt, another important raw material for batteries, has fallen from its highest level at the beginning of the year, but it has also risen sharply.

It is unknown how much Tesla paid for these raw materials under its supplier agreement.

The same is true for metals used elsewhere in automobiles, such as steel, aluminum and copper, which are also more expensive to trade on the open market.

Even the entire industry has reported tire shortages.

Tesla plans to increase production by more than 50% this year, so demand for batteries will increase by the same amount.

Conventional automakers are also increasing production of electric cars, and thus increasing production of electric car batteries.

Tesla tries to control costs as much as possible. The company recently removed features from the 3 and Y models, such as lumbar support from the passenger seat.

Musk said data from Tesla shows this feature isn't used very often, so it's not worth the extra cost or weight.

Tesla has yet to raise the prices of its two most expensive cars, the Model S and Model X.

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