Tesla faces significant inflation risks amid Russia-Ukraine war, says Elon Musk
EV giant Tesla's CEO Elon Musk has said that his electric carmaker and his rocket company SpaceX are facing significant inflationary pressure in raw materials and logistics, following Russia-Ukraine conflict. He retweeted an article on the commodity prices going to their highest levels since 2008, and said that his companies "are not alone".
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The war between Russia and Ukraine have been ramping up the prices of metals used in cars, from aluminum in the bodywork to palladium in catalytic converters to the high-grade nickel in electric vehicle batteries. And with shippers and auto-parts suppliers steering clear of Russian goods, it is putting more pressure on carmakers already reeling from a chip shortage and higher energy prices.
The US consumer inflation saw its steepest spike in the last four decades due to escalated housing, food, and gas prices. Shares of the EV maker Tesla, which closed 5% lower at $795.35 on Friday, have lost about 25% year-to-date. The electric-car maker last week raised prices of its Model Y SUVs and Model 3 Long Range sedans in the US by $1,000 each and some China-made Model 3 and Model Y vehicles by 10,000 yuan ($1,582.40) each.
Tesla is not alone though. Last week, US electric vehicle maker Rivian Automotive said that supply-chain issues could cut its planned production in half, citing soaring raw material prices and supply chain constraints. Toyota Motor Corp said it would scale back domestic production by up to 20% for April-June to ease the strain on suppliers struggling with shortages of chips and other parts.
German automaker Volkswagen also warned of the impact of the conflict on supply chains. This has led to carmakers scrambling to find alternative sources of vital parts made in Ukraine such as wire harnesses, from countries such as China and Mexico.
(with inputs from Reuters)