Tesla's China-made Model 3 vehicles are seen during a delivery event at its factory in Shanghai, China January 7, 2020. REUTERS/Aly Song
Inflationary Pressure In Raw Materials & Logistics, Threatens Car Production
Tesla Inc (TSLA.O) hiked prices in China and the United States for the second time in less than a week, after founder Elon Musk said the U.S. maker of electric cars faced significant inflation pressure.
Elon Musk recently shared that Tesla Inc and his rocket company SpaceX are facing significant inflationary pressure in raw materials and logistics.
Musk in a tweet also asked about the inflation rate outlook and said his companies”are not alone”, retweeting an article saying the Ukraine-Russia conflict sent commodity prices to their highest levels since 2008.
Russia’s invasion of Ukraine has led to a surge in prices of metals used in cars – from aluminium 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.
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Additionally, geopolitical challenges arising from Ukraine’s invasion have affected factory operations in the United States and made it difficult for raw material suppliers to quote prices. read more
“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.
Wells Fargo analysts noted that prices of nickel, a key material used in batteries, were up 130%, while cobalt, lithium and aluminum surged 16% to 88% this year.
Tesla raised prices of its popular SUVs and sedans in China and the United States by $1,000 last week. Rivian Automotive Inc (RIVN.O) warned it would cut its planned production in half.
Technicians work in the assembly line of German carmaker Volkswagen’s electric ID. 3 car in Dresden, Germany, June 8, 2021. REUTERS/Matthias Rietschel/File Photo
Volkswagen warns of more supply chain troubles in 2022
Volkswagen (VOWG_p.DE) sold 2 million fewer cars than planned last year due to the semiconductor shortage, warning that ongoing supply bottlenecks, high commodity prices and the Russia-Ukraine conflict could hit growth in 2022.
Volatility in commodity markets could continue into 2026, Volkswagen said, exacerbated by Russia’s invasion of Ukraine, which has caused prices of materials key to car production, such as nickel and palladium, to soar.
The Volkswagen Group has a production site in Kaluga as well as sales units and financing companies in Russia, it said, which could be adversely affected by further sanctions on the country. It does not have subsidiaries or equity investments in Ukraine.
Still, business activities of the group in Russia and Ukraine were not significant, it said.
Volkswagen reported on Friday that it doubled operating profit in 2021 to just under 20 billion euros ($21.99 billion)thanks to higher prices and a more favourable product mix, despite total unit deliveries hitting a 10-year low of 8.9 million. read more
Looking forward, it expects to increase deliveries by 5-10% in 2021 and boost revenues by 8-13%, it said on Friday, even as it warned of ongoing troubles in the supply chain.
The carmaker reported rising revenue across all major regions in 2021, including in Asia Pacific, where it saw a fall in unit sales.
Both Volkswagen and Toyota (7203.T) have suspended production temporarily at some plants in China due to COVID-related lockdowns, with Toyota warning on Tuesday that the suspensions could last until the end of the month. read more
Source_Reuters
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