Tesla Raises Prices Twice in One Week Due To Rising Costs

by Anna Dunn

Tesla has raised its prices twice in one week due to rising costs amid high inflation. The electric car company has done so in both the United States and Canada.

For models in the US, Reuters reports that prices have risen between 5 and 10 percent. Meanwhile, in China, prices for the Model 3 and Model Y models made there have increased by 5 percent.

The cheapest available option in Tesla’s line right now rests at $47,000.

Amid Price Jumps, Tesla Founder Elon Musk Says ‘We’re Not Alone’

Co-founder Elon Musk, a controversial billionaire who became Tesla’s largest shareholder in 2004, tweeted that both companies he’s associated with, Tesla and Space X, are suffering due to inflation pressure.

Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics,” Musk tweeted earlier this week. “And we are not alone.”

These inflation pressures have been building for quite some time. But they’ve been made significantly worse by Russia’s invasion of Ukraine on February 24th.

Like Many Car Companies, Tesla Has Russian Ties

Tesla’s rise in costs may also have something to do with the fact that it’s been buying aluminum from a Russian Company since 2020. Like most carmakers, Tesla’s ties to Russian suppliers complicates the business. Russia’s invasion of Ukraine continues. Due to both sanctions and morals, many companies are now scrambling to try and find their goods elsewhere.

The supply chain disruptions following Russia’s invasion of Ukraine have caused the prices of metals used in car manufacturing to soar. This includes the aluminum Tesla’s been buying from Russia as well as palladium, nickel, and lithium. The rise in the price of nickel and lithium is also probably causing hurt to Tesla.

Musk is right on one thing for sure: It’s far from just Tesla feeling the burn of this. EV companies from legacy automakers looking to tap into the market to start-ups worry about a supply crunch.

According to internal documents obtained by CNBC, Tesla’s bought millions worth of aluminum from the company Rusal, founded by close ally of Vladimir Putin and once-sanctioned by the Russian oligarch Oleg Deripask. Deripask is also one of the 7 billionaires that the U.K. recently imposed sanctions on over Russia’s invasion of Ukraine. Deripask was actually sanctioned by the United States long before the invasion for Russia’s “malign activities.”

That sanction was lifted by former President Donald Trump in 2019.

Tesla bought the aluminum to make casting parts for its new vehicle assembly line in Germany. Car companies buying from Russia isn’t unusual. But they now have to re-think if they should continue to do so on the legal and moral level.