Tesla Inc. Chief Executive Elon Musk said the US electric carmaker Tesla and its rocket company SpaceX face significant inflationary pressure in raw materials and logistics.
Musk, in a tweet, also asked about the outlook for the rate of inflation and said his companies are not alone. He retweeted an article that said the conflict between Ukraine and Russia pushed commodity prices to their lowest levels high since 2008.
Russia’s invasion of Ukraine has caused a spike in prices for metals used in cars. Customers are likely to foot the bill from aluminum in bodywork to palladium in catalytic converters to high-grade nickel in electric vehicle batteries.
Musk’s ‘Tesla and SpaceX’ were not available for further comment due to face significant inflationary pressure.
Rising commodity prices have raised worries about the economics of electric vehicles as legacy automakers. Its startups are preparing to launch new cars this year after overcoming problems related to chip shortages.
Besides that, geopolitical challenges stemming from the invasion of Ukraine have affected factory operations in the United States and made it inconvenient for raw material suppliers to quote prices.
Susannah Streeter, an analyst at Hargreaves Lansdown, said semiconductor shortages were fading like hopes. The invasion has led to further disruptions to the supply of essential materials and a worrying ‘rise in prices.’
Wells Fargo analysts noted that prices for nickel, a key material used in batteries, are up 130%, while cobalt, lithium, and aluminum are up between 16% and 88% this year.
Tesla raised the prices of its popular SUVs and sedans in China last week and the United States by $1,000. ‘Rivian Automotive Inc.’ warned that it would shorten its planned production in half. At the same time, Toyota Motor Corp. said it would cut output due to supply chain issues.
Shares of Rivian and Nikola Corp. fell between 0.7 percent and 2.7 percent, while Tesla traded slightly higher before the bell.