As inflationary pressures have hit commodities in recent months, the auto industry has struggled to keep investors and consumers happy. Electric vehicle maker Tesla has not been immune to the effects of inflation either, and how it stacks up against other automakers has yet to be determined.
The U.S. consumer price index for new cars is up about 15 percent since the start of 2021, and economists think new car sticker prices will rise even more with new upholstery, driver assistance systems and other upgrades, according to Barron’s† Tesla car prices are up about 30 percent for many of Tesla’s models and equipment, weeks after CEO Elon Musk said the automaker has had a “difficult quarter.”
To put it in perspective, the average brand new car costing $40,000 now would have cost just $32,000 a year ago. Tesla’s Model 3 has risen in price from about $37,000 to $47,000 since early 2021, a 27 percent increase. The Model Y is up about 32 percent to $66,000, while the Model S and X prices are up about 30 percent with price increases of about $25,000 and $31,000, respectively.
While some investors appear to be concerned that higher car prices could reduce demand for new vehicles, Tesla is currently lagging several months, as seen on the automaker’s online order configurators. Still, it hasn’t stopped investors from dropping out en masse. Shares of Tesla are down about 40 percent, while General Motors (GM) and Ford are both down about 46 percent.
https://www.youtube.com/watch?v=QK5KKFardSg
Above: Average prices for new cars remain high. (YouTube:CNBC)
Automakers aren’t alone in suffering, either. Shares of auto parts suppliers Magna International and Aptiv are down about 32 and 48 percent respectively. And despite an economic downturn facing many markets, few have felt the effects as quickly and as clearly as the auto industry.
Total new car sales in May represented annual estimates of less than 13 million units, at levels RBC analyst Joseph Spak described as “recessional”. That seems to confirm investor concerns about reduced demand, even though Tesla and other automakers are still operating in a new market and electric vehicles are here to stay. Still, some investors may consider this a good time to buy certain stocks at low premiums, and many expect Tesla’s stock to have already hit its new bottom.
Anyway, it’s worth noting how much more Tesla is doing in 2022 than just making EVs. While it’s the world’s largest maker of EVs by a few different metrics, and while it struggles with inflation along with the rest of the auto market, Tesla still has other avenues to pursue.
From the development of the Optimus Robot, the potential for future robotaxis through its Full-Self Driving system, to its solar power and battery storage, it’s safe to say Tesla is in it for the long haul, and there has to be a case will be made on how it could get even further out of all this on top of the EV industry.
Originally posted on EVANEX.
Through Zachary Viscontic
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