Tesla Model X now costs $6,000 more as EV maker hikes prices again

Yahoo Finance’s Pras Subramanian joins the Live show to discuss Tesla’s decision to raise prices on its U.S. EV models.

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AKIKO FUJITA: Shares of Tesla seeing steep declines in the session this morning after unveiling price hikes across the board for its US models. The EV maker set to raise prices by up to $6,000 based on the model, as it continues to feel the pressures of inflation and supply chain disruptions. And you see the stock down more than 6% right now. Let's bring in Yahoo Finance's Pras Subramanian with it here at the desk. I feel like-- I mean, this is kind of the inevitable, but I'm surprised to see the stock move here.

PRAS SUBRAMANIAN: Yeah, I think the stock move might have to do something with the broader market sort of a little weak here. But, you know, Tesla was hiking prices all throughout the beginning of the year, and then they paused in the spring. And now they're sort of back, as we saw CPI numbers come in pretty hot. So amongst the models we're seeing here, the Model 3 Long Range up 2,500 bucks, the Model Y Long Range up 3,000 bucks, the Model X All-Wheel Drive, the highest nominal price hike, $6,000, right? And the Model S All-Wheel Drive $5,000.

So we're seeing a lot of these-- these are big price hikes in the span of 5% to 10%. And I'm not surprised, given what Elon has been saying about how commodity prices, chip shortages, those sort of things are affecting their-- they're seeing price inflation, of course, like everyone else. And then-- and then also, he's kind of warning about the bad feeling about the economy. So maybe they're getting ahead of that by raising these prices here. And they have the power to do so because they have a website that they can just dynamically change prices and whenever they feel like it.

So dealers [INAUDIBLE] for instance, can't do that, right? Because they have a dealer network. They have to do that through them. And then they'll add their own dealer markup anyway. So it's kind of allowing them to be flexible here. But I think the biggest concern is that they're feeling these pricing pressures right now.

BRIAN CHEUNG: Well, this changes the economics for people that are considering buying a Tesla, right? Because they might get the cost savings from not having to pay for gasoline, but the car is now more expensive. Is that narrowing the gap? Because we know that with gasoline prices as high as they are right now, it's looking pretty attractive to want to buy an EV.

PRAS SUBRAMANIAN: You see the data from Q1, and we saw a lot of EV registrations that pop up in that first quarter. But a lot of survey people, people normally are concerned about how they're still concerned about range anxiety, EV infrastructure. And then [INAUDIBLE] the cost. These cars are not cheap. We're not seeing the cheap EVs just quite yet on the lots. We're seeing a few here and there, like Nissan Leaf and the Chevy Bolt is when it comes back on sale. Those are the cheapest cars you can get EV wise, but they're just not there in volume yet for people to make a big change.

BRIAN CHEUNG: And you got to find them first.

AKIKO FUJITA: Worth highlighting this chart, by the way. It's from the ICF Climate Center. But it shows the price difference between a new gas vehicle and a new EV. A new gas vehicle costs 3.7 times more than a new EV. A lot of that, I would imagine, is just gas prices, because if you think about, to your point, Pras, that the supply is pretty tight on both sides. We've seen obviously a number of car makers doubling down on EVs, [INAUDIBLE] the latest.

PRAS SUBRAMANIAN: Yeah, they announced their 2026 capital markets plan. The next four years, they want to be 80% EV and battery or hybrid and EV by 2030, investing around $4 billion to do that. So even at that super high and high end luxury hypercar performance, they're seeing that the customers want that EV powertrain.

I just want to quickly add about that chart you showed that a lot of that is not just the gas prices, but gas powered cars cost more to maintain in general because of lubricants and moving parts. Yeah, so that's also a key component. Down the line, EV is much cheaper. But can people wait that long, right? They're expensive right now. Gas-powered car's a little bit cheaper, so that's kind of the equation.

BRIAN CHEUNG: Yeah, an important reminder there. Yahoo Finance's Pras Subramanian, thanks so much. Appreciate it.