Elon Musk says Tesla prices are increasing because of supply chain disruptions across the auto industry

Tesla Model Y.
Tesla Model Y.
  • The prices of some Tesla models are going up because of the supply chain issues, CEO Elon Musk said.
  • Tesla earlier this month boosted prices on its Model 3 and Model Y.
  • The global auto industry has been hit hard by supply chain issues, notably a shortage of computer chips.
  • See more stories on Insider's business page.

Prices on some Tesla models are increasing due to global supply chain disruptions in the auto industry, particularly with raw materials, Elon Musk said on Twitter Monday.

Musk's explanation came in response to a Twitter user who said he didn't like the "direction" the company was going in by "raising prices of vehicles but removing features like lumbar for the Model Y."

The Tesla and SpaceX CEO responded: "Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially."

Tesla earlier this month boosted prices on its Model 3 and Model Y, Electrek reported. It was the fifth price increase on the models in a matter of months.

The global auto industry has been hit hard by supply chain issues, notably a shortage of computer chips, due to the COVID-19 pandemic.

The semiconductor shortage is expected to cost the global automotive industry $110 billion in 2021. Carmakers including Ford and GM have cut their earnings expectations by billions of dollars.

Tesla has not been immune to the impacts of the shortage. Last month, during the electric car company's earnings call, Musk said supply chain issues were causing "insane difficulties" and the chip shortage had impacted Tesla's manufacturing goals. Musk recently tweeted that the delivery date for Tesla's Model S Plaid, the carmaker's quickest vehicle, was pushed back by one week to June 10.

Tesla is now in talks to pay supplies upfront for computer chips, the Financial Times reported. Musk has also shown interest in vertical integration. Last year, the company announced plans to make its own battery cells and even bought land in Nevada to mine for its own battery-grade lithium.

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