Elon Musk says Tesla, SpaceX sees significant inflation risk as Ukraine-Russia

Tesla chief executive Elon Musk said on Sunday that the US electric car maker and its rocket company SpaceX were facing significant inflationary pressures on raw materials and supplies.

In a tweet, Musk also questioned the outlook for inflation and said his companies were “not alone”, retweeting an article saying that the Ukraine-Russia conflict had pushed commodity prices to their highest level since 2008.

Russia’s aggression in Ukraine has pushed up the price of metals used in cars, from aluminum in bodyworks to palladium in catalytic converters to high-grade nickel in electric car batteries, and drivers are likely to be billed. While metals are not yet the target of Western sanctions, some shippers and auto parts suppliers are moving away from Russian products, putting further pressure on carmakers who are already suffering from chip shortages and high energy prices.

Rising housing, food and gas prices have pushed U.S. consumer inflation to its highest level in four decades, possibly cementing the rise in the Federal Reserve’s interest rates.

Shares of Tesla, which closed 5 percent lower at $ 795.35 (approximately Rs. 60,870) on Friday, lost about 25 percent year-over-year.

The electric-car maker last week raised the price of its US Model Y SUV and Model 3 long range sedan by Y 1,000 (about Rs 76,510) and some Chinese-made Model 3 and Model Y cars by CNY 10,000 (about Rs 1.2 lakh). )

U.S. electric vehicle maker Rivian said last week that supply-chain problems could halve its planned production, citing rising raw material prices and supply chain constraints. Japan’s Toyota has said it will cut domestic production by up to 20 percent in April-June to ease pressure on suppliers struggling with a shortage of chips and other components.

Tesla and SpaceX did not immediately respond to a request for comment by Reuters late Sunday.

Thomson Reuters 2022

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