Elon Musk Blames Tesla Price Hikes On "Supply Chain Price Pressure"

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by Tyler Durden
Tuesday, Jun 01, 2021 - 02:29 PM

Perhaps finally realizing it can't turn a profit selling vehicles or perhaps truly between a rock and a semiconductor hard place, Tesla is raising prices (and ditching features) from its vehicles.

CEO Elon Musk took to Twitter late on Memorial Day to explain the hikes, blaming them on the convenient scapegoat of supply chain issues.

"Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially," Musk wrote in a Tweet late on Memorial Day.

Musk was responding to a Tweet that was critical of the price hikes. 

 "I really don't like the direction @tesla is going raising prices of vehicles but removing features like lumbar for the Model Y," a user complained.

Yet despite placing the blame on supply chain issues now, when asked about these challenges during the company's April conference call, Musk said “We’re mostly out of that particular problem.”

The automaker hiked the price of its Model 3 and Model Y vehicles in May, marking its "fifth incremental price increase for its vehicles in just a few months", according to Reuters

Musk also claimed on Twitter that the removal of lumbar support in vehicles was based on "logs" showing "almost no usage". Many social media users questioned whether or not Tesla could even monitor lumbar support usage through its data logs. 

But that's besides the point. No matter how you slice it, Tesla is ditching features in its vehicles. Among the features Tesla has done away with over the last few weeks has been radar sensors for its vehicles. Recall, less than a week ago we noted that Tesla's Model 3 had lost "top pick" status from Consumer Reports due to no longer equipping vehicles with radar.

Without the radar sensors, "vehicles may lack some key advanced safety features, including forward collision warning (FCW) and automatic emergency braking (AEB)", according to Consumer Reports. This has caused these models to lose critical performance designations from testing organizations like the Insurance Institute for Highway Safety.

Vehicles built on or after April 27, 2021 are no longer going to receive the NHTSA's "check mark" for FCW and AEB. The agency rescinded the check marks "after Tesla briefed the agency on production changes due to the transition to Tesla Vision from radar."

"Because of the change, Consumer Reports no longer lists the Model 3 as a Top Pick, and IIHS plans to remove the Model 3’s Top Safety Pick+ designation," CR wrote.

Days prior to losing the designation, Tesla said it was ditching radar in favor of cameras. The company said it is replacing radar with a "camera-focused Autopilot system" and that the change is going to apply to both Model 3 and Model Y vehicles in North America, starting this month.