Tesla (TSLA) has raised the prices of some of its EV models by as much as nearly $1,600 in the U.S. and China, according to a Reuters report. TSLA jumped 4.2% to close at $858.97 on March 9.
Tesla is a leading maker of electric vehicles. The latest price increases apply to the Long Range versions of the Model 3 sedan and the Model Y SUV. In the U.S., the prices of those models have increased by $1,000. In China, the cars now cost about $1,582 more.
Tesla has increased its car prices multiple times in the U.S. over the past year or so. For example, the price of the Model 3 Long Range has jumped about 11% and the Model Y Long Range price has increased 20% from January 2021.
Rising Raw Material Costs
The price hikes come amid rising raw material costs, especially battery materials such as nickel and lithium. Russia is a major nickel producer. The Russia-Ukraine conflict has disrupted the supply of nickel, leading to a sharp increase in the cost of battery material. In electric vehicles, the battery is the most expensive component.
Stock Rating
Yesterday, Piper Sandler analyst Alexander Potter reiterated a Buy rating on Tesla stock with a $1,350 price target, implying 57.16% upside potential to current levels. Although the analyst continues to see a huge opportunity for Tesla in China, he cautions that deteriorating U.S.-China relations over geopolitical issues could cost the company.
Consensus among analysts is a Moderate Buy based on 15 Buys, 7 Holds, and 6 Sells. The average Tesla price target of $1,068.40 implies 24.38% upside potential to current levels.
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