Tesla raises prices for the second time in less than a week. It comes after Tesla CEO Elon Musk stated that Tesla would face significant inflationary pressure as prices of raw materials and logistics are increasing. The cause of the supply chain disruptions is said to be coming after Russia’s invasion of Ukraine.
Prices of metals used in cars have soared, including aluminum that is used in the bodywork, palladium used in catalytic converters, and nickel and lithium that power electric vehicle (EV) batteries. The costs have raised concerns about EV economics, as legacy automakers and startups prepare to launch new cars on the back of a long semiconductor supply crunch that is still knocking production at companies including Toyota and Volkswagen. Tesla, which has a diversified supply chain, has bought “millions of euros worth of aluminum” from Russian aluminum giant Rusal, CNBC reported on Monday, citing internal documents. Rusal’s billionaire founder Oleg Deripaska has been sanctioned by Britain. Tesla bought Rusal aluminum for casting parts at its new vehicle assembly plant outside of Berlin for the Tesla Model Y, among other things, CNBC said. Also, the company received a conditional go-ahead for its 5 billion euro ($5.5 billion) German gigafactory earlier this month after months of delay.
“Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics,” Musk tweeted on Monday, referring to his rocket company. “And we are not alone,” he said. Russia’s invasion of Ukraine has led to a surge in 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 customers are likely to foot the bill.
Soaring raw material prices has raised concerns about EV economics, as legacy automakers and startups prepare to launch new cars this year after overcoming problems related to chip shortages. “Just as hopes the semi-conductor shortage was easing… the invasion has thrown up fresh disruptions to the supply of essential materials and a worrying surge in prices,” Hargreaves Lansdown analyst Susannah Streeter said.
Tesla raised prices on Tuesday for all its models in the United States by 5%-10%, its website showed. In China, it raised prices of some China-made Model 3 and Model Y products by about 5%. Earlier, the company increased the prices of its U.S. Model Y SUVs and Model 3 Long Range sedans and some China-made Model 3 and Model Y vehicles.