Musk Says Tesla And SpaceX See Significant Inflation Risks

SpaceX owner and Tesla CEO Elon Musk speaks with legendary game designer Todd Howard (not pictured) at the E3 gaming conference in Los Angeles, California, USA, June 13, 2019. REUTERS/Mike Blake

March 13 – Tesla Inc (TSLA.O) chief executive Elon Musk said on Sunday that the American electric car maker and its rocket company SpaceX are facing significant inflationary pressures on raw materials and logistics.

Musk also tweeted about the outlook for inflation and said his companies were “not alone,” retweeting an article that the conflict between Ukraine and Russia sent commodity prices to their highest levels since 2008.

The Russian invasion of Ukraine has sent the prices of metals used in cars skyrocketing, from aluminum in the bodywork to palladium in catalytic converters and high-grade nickel in electric vehicle batteries, and drivers are likely to pay the bill.

Although metals have not yet been hit by Western sanctions, some shippers and auto parts suppliers are avoiding Russian goods, putting additional pressure on automakers already suffering from woodchip shortages and rising energy prices. More

US consumer inflation driven by rising housing, food and gas prices has reached its sharpest spike in four decades, likely strengthening the case for an interest rate hike by the Federal Reserve. More

Tesla shares, which closed 5% lower at $795.35 on Friday, have lost about 25% since the start of the year.

Last week, the electric car maker raised prices on U.S. Model Y SUVs and Model 3 Long Range sedans by $1,000 each, and some Chinese-made Model 3 and Model Y vehicles by 10,000 yuan ($1,582.40).

US electric vehicle maker Rivian Automotive Inc (RIVN.O) said last week that supply chain issues could cut its planned production in half due to soaring raw material prices and supply chain restrictions. Japan’s Toyota Motor Corp (7203.T) said it would cut domestic production by 20% in April-June to relieve pressure on suppliers struggling with shortages of chips and other parts.

Tesla and SpaceX did not immediately respond to Reuters requests for comment late Sunday night.

Reporting by Jaivir Singh Shekhawat in Bangalore; Edited by Rashmi Aich and Sherry Jacob-Phillips

Our Standards: Trust Principles.