Tesla is again raising the price of electric vehicles. Good news for investors worried about margins.

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Tesla has conducted another round of price hikes for the majority of its electric vehicle portfolio in the US

The gains are small, but could help allay shareholder concerns about the company shrinking profit margins. They also send an important message to car buyers: Do not wait for more cuts.

Tesla

(Ticker: TSLA) increased the prices of its Model S and X by $1,000 and its Model Y by $250 late Thursday, according to its website. The move follows a similar round of small price increases earlier this month. Prices for the entry-level Model 3 remained unchanged.

The increases could allay investors’ worries about the series of price cuts that have boosted demand Beat Tesla’s margins. After significantly cutting prices in early 2023, Tesla gained market share in the U.S. and China, delivering a record number of cars in the first quarter.

However, these gains came at a price. Tesla reported an operating profit margin of about 11% in the first quarter, compared to more than 19% a year earlier. Tesla stock fell nearly 10% following the release of its first-quarter earnings.

Tesla prices still remain significantly lower than at the beginning of the year. The long-range Tesla Model Y is currently priced at around $50,500. It started at over $60,000 in 2023. Prices fell below $50,000 in April, compared to around $59,000 at the end of 2021.

Recent price increases may convince investors that demand is strong. Wall Street projects that Tesla will ship around 1.8 million units in 2023. Assuming that Tesla delivered 422,875 cars in the first quarter, that means it will average around 460,000 units over the last three quarters of 2023.

The move could also lure potential customers to buy now by making it clear that prices could continue to rise. Even stable prices can send a positive message to consumers: there is no more reason wait for falling prices.

Tesla shares are up 1.3% in premarket trading on Friday, while futures on the

S&P 500

And

Nasdaq Composite

increased by about 0.4% and 0.2% respectively.

The stock is likely reacting to news that CEO Elon Musk said he found one new managing director for Twitter, which raised shares on Thursday. Some Tesla investors were concerned that Musk was underspending and juggling the various deals that were taking up his time.

Sign Adam Clark adam.clark@barrons.com