Elon Musk increases Tesla price in US and China on inflation concerns

It's the second time in a week the company has raised the price of its electric vehicles as costs of raw materials surge

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Tesla raised prices in China and the US on Tuesday — its second increase in less than a week — after founder Elon Musk said the US maker of electric cars faced significant inflation pressure.

The increases come as costs of raw materials surge, worsened by a crisis over Russia's military offensive in Ukraine.

Mr Musk said on Sunday that the electric vehicle maker and rocket company Space X faced pressure in areas such as raw materials and logistics.

The company raised prices for all its models in the US, its website showed. In China, it raised prices of some China-made Model 3 and Model Y vehicles by about 5 per cent, soon after an increase made on March 10. Tesla declined to comment.

After the increases in China, the Model Y Long Range vehicle costs 375,900 yuan ($59,098), up 18,000 yuan from March 10, when its price went up by 10,000 yuan.

The price tag of the Model 3 Performance unit was 367,900 yuan after Tuesday's increase of 18,000 yuan, which came after an increase of 10,000 yuan five days ago.

Russia's military offensive in Ukraine has been pushing up the prices of metals used in cars, from aluminium in the bodywork to palladium in catalytic converters to the high-grade nickel in electric vehicle batteries, and drivers are expected to foot the bill.

While metals have yet to become the target of western sanctions, some shipping companies and car parts suppliers are steering clear of Russian goods, putting more pressure on vehicle manufacturers already reeling from a chip shortage and higher energy prices.

Escalated by housing, food and gas prices, US consumer inflation had its steepest increase in the last four decades, probably cementing the case for the Federal Reserve to raise interest rates.

Meanwhile, rising prices of nickel, lithium and other materials are expected to slow and even temporarily reverse the long-term trend of falling costs of batteries, the most expensive part of EVs, hampering the broader adoption of the technology, Gregory Miller, an analyst at industry forecaster Benchmark Mineral Intelligence, said last week.

Updated: March 15, 2022, 6:51 AM