Elon Musk noted that he believes inflation might finally be trending down based on Tesla commodity prices. The CEO has previously said that he would be waiting for that to start reducing the prices of Tesla vehicles.
Over the last few years, the inflation rate has been hitting record highs that we haven’t seen in decades.
It has resulted in price increases across virtually every industry, especially the auto industry.
On top of it, electric vehicle makers are seeing higher battery material costs due to geopolitical situations, like the war in Ukraine, which sent the price of nickel up massively.
In Tesla’s case, all of these factors have resulted in higher costs, and the automaker has raised its prices by more than 20% over the last two years. For example, the Tesla Model Y started at $53,000 in early 2020, and today, the same vehicle starts at $66,000.
That’s a 25% increase in price in less than two years, and the same is happening across Tesla’s entire vehicle lineup.
It disappointed many as CEO Elon Musk always said that Tesla’s goal was to make electric vehicles more affordable to improve adoption.
Earlier this month, Musk said that Tesla is waiting for inflation to “calm down” before finally reducing EV prices.
Today, the CEO took to Twitter to say that he might be seeing signs that inflation is finally trending down based on commodity prices that Tesla is tracking:
However, when asked if Tesla is going to reduce prices, Musk said that it was too early to say at this point.
Interestingly, Musk’s comment comes a day after Democrats in the Senate announced having reached a deal on the “Inflation Reduction Act of 2022,” which includes a reform of the federal EV tax credit.
The reform would enable Tesla vehicles to gain access to the credit again, but there’s a new price limit on electric vehicles to be eligible. Tesla reducing its prices would result in a wider access to the credit.
For example, there’s a $55,000 price limit on sedans to get access to the $7,500 credit, and the Tesla Model 3 Long Range starts at $57,990. If the automaker were to reduce the price by $3,000, buyers would get access to the $7,500 credit.
However, the bill hasn’t been put to vote or made into law yet, but it is expected that many automakers, including Tesla, are going to try to adjust their prices to fit the requirements.
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Author: Fred Lambert