Tesla raises prices for older models as investor group expresses dismay with Elon Musk

The company's board has been urged to make sure Tesla has a chief executive who dedicates enough time and attention to running the company

A Tesla service centre in Singapore. Reuters

After cutting US vehicle prices four times this year, Tesla Motors raised the cost overnight on its slow-selling more expensive models.

The hike could be an effort to appease investors, who dumped shares of Tesla on Thursday after its earnings and profit margins dropped due to previous price cuts.

Investors also expressed concerns on Friday in a letter to Tesla's board that chief executive Elon Musk is too distracted running his other companies, including Twitter and SpaceX, to effectively lead the electric car and solar panel company.

The Austin-based company added $2,500 to all four versions of the Models S and X, increasing their prices by 2.4 per cent to 2.9 per cent.

The lowest-price Model S now starts at $87,490, while the base price for the X is $97,490, according to Tesla's website on Friday. Neither is eligible for the US government's $7,500 electric vehicle tax credit because they exceed sticker price limits.

Prices of the company's top-selling Model Y small SUV and Model 3 small sedan remained the same after being lowered earlier this week.

Tesla shares closed Thursday down nearly 10 per cent after Mr Musk said the company would sacrifice profit margins in order to boost sales.

On Wednesday, Tesla reported first-quarter profit that fell 24 per cent from a year ago, and operating profit margins that dropped from 19.2 per cent in the first quarter of last year to 11.4 per cent last quarter.

The stock closed on Friday at $165.08, up 1.3 per cent.

The price increases come at a strange time for Tesla because global sales of the ageing Model X large SUV and Model S big sedan fell nearly 38 per cent in the first quarter to 10,695.

In a letter to Tesla chairwoman Robyn Denholm and the board, a group of 17 investors who say they hold over $1.5 billion in Tesla shares called on the board to make sure Tesla has a chief executive who dedicates enough time and attention to running the company.

The group, which includes Amalgamated Bank, the New York City Comptroller's Office, and some pension and investment funds, wrote that it has lost confidence in the board over its “meagre oversight” of Mr Musk.

Messages were left on Friday seeking comment from Tesla.

“The board has allowed the chief executive to be overcommitted at a time when the company faces critical challenges, including increased competition, regulatory scrutiny, and a stock slide,” the letter said.

The group asked for a plan to overhaul composition of the board, including moving out directors with close ties to Mr Musk.

In addition to Tesla, Mr Musk is chief executive of Twitter and SpaceX, and is co-founder of Neuralink, The Boring Company and Open AI.

The group, citing complaints about racial discrimination, poor plant safety and investigations by US motorway safety regulators and the Justice Department, wrote that Tesla "appears to be embracing a broader culture of being 'above the law'."

Amalgamated Bank, the first investor listed on the letter, says on its website that it works with over 1,000 unions and has given strike loans to workers walking picket lines. Tesla has been in a battle with the United Auto Workers union over organising its factory in Fremont, California.

Investors have not been kind to electric vehicle makers in the past week. Through Friday, Tesla shares were down 11 per cent for the week, while start-ups Rivian, Lucid and Lordstown Motors all lost between 8 per cent and 10 per cent of their value. Fisker dropped 11 per cent for the week, and Nio fell 10 per cent. Nikola bucked the trend, rising almost 12.5 per cent.