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Elon Musk joins inflation debate with raw materials tweet

Elon Musk
Elon Musk, a prolific Twitter user, said the app needed to be taken private to grow. Photo: Reuters.

Elon Musk said that Tesla prices are increasing because of raw material costs, joining the debate over how inflation is spilling from commodities into other markets

(AF) Tesla’s electric vehicle prices are increasing because of rising raw material prices that are affecting auto industry supply chains, founder Elon Musk said in response to a tweet. Musk was joining a wider debate about the inflationary impact of rising commodity prices.

His tweeted response to a customer query came as it was reported that the US Securities and Exchange Commission (SEC) repeatedly told Tesla in recent years that Musk had violated a court-ordered policy for his tweets to be reviewed by company lawyers.

Musk’s tweets regularly move the share price of Tesla along with the value of bitcoin and other cryptocurrencies.

His latest input came in a debate about why Tesla has been putting up prices for some of its vehicles, which he attributed to rising commodity values.

“Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially,” Musk said in a tweet on Monday May 31.

He was responding to twitter query, which said: “I really don’t like the direction @tesla is going raising prices of vehicles but removing features like lumbar for the Model Y…”

In May, Tesla increased its Model 3 and Model Y prices, the automaker’s fifth incremental price increase for its vehicles in just a few months, the Electrek website said.

During an an earnings call in April, Musk said Tesla had experienced “some of the most difficult supply chain challenges,” citing a chip shortage. “We’re mostly out of that particular problem,” he added at the time.

Lumbar support

In response to the removal of lumbar support on the passenger side in Tesla’s Model Y, Musk said, “Moving lumbar was removed only in front passenger seat of 3/Y (obv not there in rear seats). Logs showed almost no usage. Not worth cost/mass for everyone when almost never used.”

New Tesla Model Y owners are reportedly claiming that that their electric SUVs are being delivered without lumbar support on the passenger side.

A report on June 1 in the Wall Street Journal that the SEC had in 2019 and 2020 told Tesla that Musk breached court orders that his tweets should be approved by company lawyers was just the latest brush with regulators for the mercurial business head.

Musk is also under threat of a regulatory clampdown in China, which is home to one of Tesla’s two main factories and the biggest individual global market for electric vehicles at the moment.

China has taken steps to ensure that data collected by Tesla’s vehicles cannot be moved outside the country, and there have been signs that political authorities have encouraged a social media backlash against the firm.

These steps may be part of a move to slow Tesla’s sales growth in China and allow domestic electric vehicle manufacturers to catch up with the US-based firm.


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Jon Macaskill

Jon Macaskill has over 25 years experience covering financial markets from New York and London. He won the State Street press award for 'Best Editorial Comment' in 2016


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