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Why Tesla stock jumped today

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Elon Musk’s social media followers have seen him comment on how to deal with an inflationary environment recently, and now the Tesla (NASDAQ: TSLA) CEO is showing people how his company is addressing rising commodity prices. Today, investors took the news of rising Tesla vehicle prices as a good sign for the business, pushing Tesla shares up 2.9% as of 11:55 a.m. ET. 

So what

Tesla has announced it is raising prices on its electric vehicles for the second time in a week, as reported by CNBC. Last week, Tesla said it raised prices on certain models in the U.S. by $1,000, and some Model 3 and Model Y vehicles made in China by more than $1,500. Now, it seems rising commodity prices and other inflationary pressures are bringing another price increase. 

Now what

While the company didn’t spell out the reasons behind the most recent price plan, Musk said on social media earlier this week that Tesla and his private space company, SpaceX, are both seeing “significant recent inflation pressure in raw materials & logistics.” Commodities including nickel, used in EV batteries, have been on the rise recently.

Today, Tesla increased prices of all U.S. vehicle models, and some Model 3 and Model Y versions in China. Tesla’s China website showed a new 5% increase on the starting price for the Model 3 Performance to the equivalent of about $57,650, according to the report. Prices for two of the company’s Model Y SUV options also increased by 5%. 

The investor take on the price increase seems to be that the company remains supply constrained. Demand for its products is still strong, and increasing vehicle prices will allow it to maintain its margins, even with production costs increasing. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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