The first cars running on batteries that came to the market cost a bomb. EV companies assured their fans that as production rises, costs would drop for them to offer their electric versions with cheaper price tags. However, what followed right after that was the pandemic. And now it’s the Ukraine-Russia war.
The Bureau of Labor Statistics reported an inflation rate for this week that is higher than expected, with the consumer price index rising 9.1% from what it was last year. In a reply to a question on Twitter asking Elon Musk if his company plans to lower prices, once the supply chain bottlenecks are sorted out, the CEO said that if inflation ultimately “calms down”, the company will lower the prices.
Automobile manufacturers across the globe have been suffering from supply chain bottlenecks. Raw materials costs have raised heavily and the current inflation trend is not helping the situation in any way. While it initially felt that Tesla cars somehow managed to steer away from this bad weather they too have finally caught up in the storm. Tesla increased the prices of all its car models in the US and China this year in March. It exercised one more way of hiking prices across its models as late as June this year. The Model Y today costs $65,990 from an initial $62,990. Model 3 started with a price of $35,000 and today costs $44,990.
However, increased costs of raw materials and inflation do not give us the complete picture. If we look at Tesla’s sales, the company’s revenues have just been growing consistently from 2020 till today. Fans could have bought the story of higher costs if the profit margins were to hold stagnant. But that’s not the case as cash inflows for Tesla to give any stakeholder who has invested in the brand, a night of sound sleep.
