Elon Musk, CEO of Tesla Inc (TSLA.O), stated that the US electric carmaker and his rocket company SpaceX are facing significant inflationary pressures in raw materials and logistics.
Musk also asked about the outlook for inflation rates in a tweet on Sunday, declaring his companies “are not alone,” retweeting an article claiming that the Ukraine-Russia conflict has sent commodity prices to their highest levels since 2008.
Russia’s invasion of Ukraine has caused a spike in the prices of metals used in automobiles, ranging from aluminium in bodywork to palladium in catalytic converters to high-grade nickel in electric vehicle batteries, and customers are likely to bear the brunt of the cost.
Tesla and SpaceX did not respond to requests for additional information. As legacy automakers and startups prepare to launch new cars this year after overcoming issues pertaining to chip shortages, rising raw material prices have raised concerns about EV economics.
Furthermore, the geopolitical challenges posed by Ukraine’s invasion have hampered factory operations in the United States and made it difficult for raw material suppliers to quote prices.
According to Wells Fargo analysts, nickel, a key material used in batteries, is up 130 percent this year, while cobalt, lithium, and aluminium are up 16 percent to 88 percent. Tesla raised the prices of its popular SUVs and sedans in China and the United States by $1,000 last week. Rivian Automotive Inc (RIVN.O) warned that it would cut planned production in half, while Toyota Motor Corp said it would reduce output due to supply-chain issues.
Inflation is wreaking havoc on everything from carpools to the ability of US factories to quote prices on new business.
BCI Solutions Inc., a metal foundry in Bremen, Indiana, lost 14 workers in the last two weeks, accounting for more than 7% of its total workforce and an unprecedented number in pre-pandemic times. BCI has long struggled to retain employees, but it has never lost so many in such a short period of time.
