Elon Musk explains Tesla's price increases, removal of lumbar support

Tesla Inc (NASDAQ:TSLA) has increased prices multiple times over the last few months, and now we know why. The automaker also announced plans to remove lumbar support from the Model 3 and Model Y. Q1 2021 hedge fund letters, conferences and more Musk explains Tesla's price increases Tesla has raised the prices on the Model […]
Elon Musk explains Tesla's price increases, removal of lumbar support
Image credit: dominickvietor / Pixabay via Valuewalk

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This story originally appeared on ValueWalk

Tesla Inc (NASDAQ:TSLA) has increased prices multiple times over the last few months, and now we know why. The automaker also announced plans to remove lumbar support from the Model 3 and Model Y.

 

Q1 2021 hedge fund letters, conferences and more

Musk explains Tesla's price increases

Tesla has raised the prices on the Model 3 and Model Y seven times so far this year. Although the increases were small and incremental, they add up. The standard range Model 3, Tesla's least expensive vehicle, increased from a low of $37,000 in February to $40,000, marking a more than 8% increase. Just a few months ago, the long-range Model Y with all-wheel drive sold for less than $50,000, but now it starts at $52,000.

Tesla never offered any explanation for the price increases, but CEO has now explained in response to a Twitter remark from a longtime Tesla enthusiast. Twitter user @Ryanth3nerd said he was displeased with the direction the automaker was moving in by raising prices and removing features like lumbar support for the Model Y. Additionally, he pointed to rumors that the full self-driving feature would increase to $14,000 without any real added features unless you are a beta tester.

An explanation

Musk told him that they removed lumbar support from the front passenger seat of the Model 3 and Model Y because almost no one was using it, according to logs. He said it wasn't worth the cost or mass for everyone when it was rarely used.

He added that prices are increasing "due to major supply chain price pressure industry-wide." He said raw materials especially have increased in price.

Raw material prices on the rise

Musk didn't say which raw materials are causing Tesla's prices to increase, but it's no secret that many industrial metals have been under price pressure. The recent shortage of chips for could be causing pressure there as well.

The copper price has more than doubled since the pandemic started. When China announced price controls for industrial metals, it temporarily eased some of the pressure, but then prices started rallying again toward the end of last week. Additionally, aluminum and steel prices have also been increasing in price.

Tesla is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders' families.

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