Image Source: Twitter
By: Michael Argenta
March 20, 2022
While the average national gas price hovers around $4.27 per gallon, those looking to make the switch to electric vehicles will now have more to consider. This past week, Tesla CEO, Elon Musk announced that his company raised prices on all four EV models. While these changes were not completely drastic, most instituted at least a $2,000 increase in sticker price. Notably, the Model X’s price increased by $10,000. Although Tesla is not the only EV manufacturer, it will be interesting to see if people continue to buy them or look somewhere else.
This price increase was the second of March and according to Musk is due to rising inflation. Musk himself hinted about a potential price hike on Twitter stating that both “Tesla & SpaceX are seeing significant recent inflation pressure in raw materials and logistics.” Besides that, Musk linked an article regarding rising commodity prices due to impending shortages of the raw materials Russia exports.
The material responsible for higher Tesla prices is nickel. Russia is a critical supplier of this, but manufacturers have seen prices nearly double since the start of the war in Ukraine. Without Russian nickel or more expensive imports, Tesla will have a harder time manufacturing their lithium-ion batteries. However, all EV makers will struggle without being able to make or make these batteries cheaply which will likely cause an increase across the board.
Overall, just because Tesla was the first company to raise prices due to inflation and production shortages does not mean that this is over. Prices could continue to soar and other electric vehicle companies will likely follow suit. At a time when gas prices are the highest in years, it is not an ideal time to jump into the EV market. Inflation has the potential to wreak havoc on the entire economy, and consumers will get the worst of it.