Tesla Saw Record Profits So Far in 2022 but Continues To Raise Prices
Despite record profits in 2022, Tesla and other automakers continue to raise the prices of new vehicles. Why, though?
Written by Andrew Kidd
Reviewed by Kathleen Flear
When corporations see record profits, the savings are not usually passed down to the consumer. That’s the case with
Tesla
, which has seen record earnings so far in 2022 but continues to raise the prices of its vehicles
while even eliminating some included perks with its cars—like the included mobile charger.Record earnings for Tesla
As
TechCrunch
reports, despite many automakers claiming the COVID-19 pandemic has been tough on their bottom lines, many—particularly Tesla—keep raking in huge profits.In Tesla’s case, the automaker is blaming inflation and pressure to increase costs from suppliers for its higher vehicle prices.
Tesla CEO Elon Musk, who recently acquired Twitter for around $44 billion, said the company wants to make electric vehicles as affordable as possible, but that it’s been tough to do so with inflation at the highest rate it’s been in decades.
He told TechCrunch that Tesla’s suppliers have been requesting cost increases for parts up to 20-30 percent from last year to the end of this year.
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Tesla blames the rising cost of doing business
In the first quarter of 2022, Tesla upped the MSRP on its electric vehicles between 5% to 10%, saying the market will accommodate it as the demand for new vehicles outpaces the supply.
Musk noted that despite the seemingly “unreasonable” move to raise the prices on its vehicles given its record profits in the first quarter, the waitlist for new Tesla vehicles extends into next year.
Translation? People are still buying Tesla vehicles despite the price hikes, and they’re likely to continue buying them going forward. A good indicator of this is Kelley Blue Book’s recent recognition of Tesla as a
‘Best Value Luxury Brand
’ in March.It’s not simply corporate greed
It’s easy to blame Tesla and other automakers for being greedy in a cash-strapped nation facing record inflation, rising
fuel costs
and residual supply chain issues from a seemingly never-ending pandemic. But the blame isn’t entirely on them.Supply chain issues in Shanghai are wreaking havoc on bottoms lines around the world, with a recent COVID-19 outbreak causing many factories to either shut down their production lines or shut in their workers (really).
Semiconductor shortages have caused huge problems on increasingly tech-filled vehicles, with some automakers unable to complete production of a vehicle until chips become available.
Factor in a problem unique to electric vehicles—the increasing demand and subsequent scarcity of crucial battery components—and you have a recipe for even more sticker shock on dealer lots.
It certainly isn’t the best time to be a new car buyer. But again, we can’t solely blame Tesla and other automakers for being money-grubbers, even if it feels good to simplify a complex problem in that way.
The days of the sub-$20,000 new car are over
, and things are only going to get worse for their electric counterparts before they get better as analysts warn of a shortage of critical battery components.Save on insurance with Jerry
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