Russia’s invasion of Ukraine caused a spike in crude oil prices. This surge, in turn, has increased the cost of raw materials, creating headaches for many industries, including the automotive industry.
Since Russia invaded Ukraine on Feb. 24, oil prices have jumped more than 30%, hitting $139 a barrel at some point this week. The price of oil dropped to around $106 on Wednesday but was trading at around $116 by Thursday morning.
In other commodities, prices for aluminum and nickel rose amid rumors that the war and Western sanctions could cut Russian exports.
Russia accounts for 6% of world aluminum supplies and 7% of nickel mined, Reuters reports. Thus, war and sanctions could harm the world’s supply of metals.
The impact will be significant on vehicle prices, especially electric vehicles, as nickel is a key component in batteries.
Potential increase in vehicle entry costs: $1,000.
“Have you seen nickel futures today?” Morgan Stanley analyst Adam Jonas wrote in a research note released Monday. “At the time of this writing, the price of nickel is up 67.2% today alone, which means an increase in the cost of the average U.S. electric car by about $1,000.”
In other words, we can expect the price of electric vehicles to rise. Well, it didn’t take long: Tesla, the market leader, just raised prices on some models.
“It will take years and countless regulatory hurdles to create alternative nickel sources (Canada, Australia, etc.),” Jonas said.
Tesla
The high-end electric car maker has updated prices for the Model 3 sedan and Model Y SUV, among others.
So it gives this:
Model 3 RWD, 267 miles range – $44,990 (unchanged)
Model 3 Long Range, 334 miles range – $51,990 (+$1,000)
Model 3 Performance, 315 mile range – $58,990 (unchanged)
Model Y Long Range, 318 mile range – $59,990 (+$1,000)
Y Performance Model, 303 Miles Range – $64,990 (+$1,000)
Tesla does not say whether this price increase will apply to old orders or only new ones.
The company, which has had no press department since last year, did not respond to a request for comment.
The last time Tesla raised prices was in November last year.
The new price increase is also accompanied by a delay in deliveries of some vehicles. The Y Performance model, due in April, will now ship in May, while the Long Range will arrive in September instead of August.
Inevitable
This imminent price increase seemed to be accepted by Tesla fans given the backlash on social media.
“It’s not so terrible, given the increase in prices for everything,” wrote one user.
“I think it’s reasonable to expect prices to rise further,” added Sawyer Merritt, a self-proclaimed investor in Tesla.
Other users, however, have argued that cars are getting out of reach.
“This could practically mean that a $60K car is out of reach for most right now,” wrote another used one.
“This is getting ridiculous. In other words, now the payment for the car is $1,000 per month. Well, $954 a month, to be exact, for the cheapest car. Without FSD or any other options. achieve,” wrote a frustrated user.
Rivian (RIVN) – Get the Rivian Automotive, Inc. report. Class A, one of Tesla’s younger rivals, recently faced a cascade of cancellations after price hikes. CEO R.J. Scaringe publicly apologized and stated that customer trust had been violated. The company immediately dropped these new prices for already registered orders.
“While this was the logic, it was wrong and we undermined your trust in Rivian,” Scaringe wrote, referring to the price increase.