April 21 (UPI) -- After taking stock market hits for lowering prices on some of its electric vehicle models this year, Tesla announced on Friday it will increase prices on its high-end Model S and Model X vehicles.
Tesla has increased the base cost of its Model S from $ 84,990 to $87,490 while the price of the Model X was boosted from $94,990 to $97,490.
Tesla sold 10,695 units of the Model S and X in the first quarter, representing about 2.5% of total deliveries.
The price increases come after concerns were raised about the company's price margins. Excluding regulatory credits sales, Tesla's margins in the first quarter dropped to 19%, below the 20% threshold the company set for itself.
While Tesla's operating margin dropped to a two-year low of 11.4%, it remained well above competitors like General Motors, with an operating margin of 6.6%, and Ford Motor, which has a 4% operating margin.
On Wednesday, Tesla announced price cuts for its Model Y by $3,000 and the Model 3 by 4.7% to make it less than $40,000. The price of the company's base Model Y is 29% cheaper than it was at the start of 2023, while the Model 3 has dropped 15% in price following the series of cuts.
"[Tesla's price cuts are] completely rational and should surprise no one," Ford CEO Jim Farley said before the price hikes were announced, warning of a possible EV price war. "Price wars are breaking out everywhere. Who's going to blink for growth?"
