On Thursday, shares of electric car leader Tesla (NASDAQ: TSLA) –8.54 percent dropped over 9 percent due to inflation. It’s not just an issue for Tesla, but the whole global automotive sector.
Models and trim levels of Tesla cars and SUVs have seen a price increase ranging from $2,000 to $6,000. Since the beginning of 2021, Tesla (NASDAQ: TSLA) has been increasing its pricing.
It has raised in price from $37,000 to $47,000 since the beginning of 2021. This is a 27% increase. The cost of a long-range Model Y has increased by 32% to around $66,000. The Model S and X are now $25,000 and $31,000 more expensive than they were last year. Those price rises are in the 30 percent area.
It is possible to get this information by visiting the Tesla website. There was no response from Tesla to a request for comment on the price hikes.
The issue of inflation is not exclusive to Tesla. Buying a new automobile, whether it’s a gas or electric vehicle, means paying more money. Since the beginning of 2021, the U.S. consumer price index for new cars has increased by 15%.
Sticker prices have likely increased by over 15%. There are so-called hedonic modifications included in the CPI statistics. Prices are based on the quality of a new automobile. Today’s $40,000 brand new automobile may have sold for $32,000 a year ago. An increase of 25% is what we’re looking at here. A 15% rise in the price of a modern automobile may be attributed to the inclusion of heated seats and more sophisticated driver-assistance capabilities.
Investors have never responded so adversely to a price rise for Tesla. In the past, higher prices were likely seen as an indication of rising demand. It seems that the Tesla car backlog will take many months to clear.
Investors tend to be concerned about the effect of growing expenses on profit margins and that rising prices may cut off demand for new autos. In May, less than 13 million new cars were sold on an annual basis. A recessionary threshold, according to RBC’s Joseph Spak. Despite this, he saw a downward trend in buyer incentives, and industry inventories are still low. This suggests that there hasn’t been a walkout by new vehicle purchasers yet.
However, investors have gone on a work stoppage. They are befuddled by the whole automotive landscape, and as a result, the majority of automotive stocks have dropped precipitously. This year, Tesla’s stock has lost approximately 40% of its value. They have both fallen by roughly 46 percent, with General Motors‘ 8.07 percent (GM) and Ford’s 8.31 percent (F) share drops. Magna International (MGA) and Aptiv (APTV) share prices have fallen about 32 percent and 48 percent, respectively, since the beginning of the year.
Stocks in the automotive industry have underperformed the market as a whole. The S&P 500SPX is down 3.25 percent, while the Nasdaq Composite COMP is down 4.08 percent, both down roughly 23 percent.
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