CEO Elon Musk says Tesla and SpaceX are facing unprecedented price increases
The CEO of electric car maker Tesla, Elon Musk, said on March 13 that the company, as well as the company SpaceX that builds rockets and his spacecraft, is facing severe inflationary pressures. important due to the high cost of raw materials and logistics.
On Twitter, Elon Musk mentioned the inflation situation in the coming years, saying that many other businesses are also facing this challenge. The Tesla CEO cited an article in the Financial Times as saying that the conflict in Ukraine has pushed general commodity prices to their highest levels since 2008.
The Russia-Ukraine conflict has driven up prices for metal parts used to build cars, from aluminum for bodywork to palladium for catalytic converters and nickel for electric vehicle batteries.
While metals have not yet been the target of Western sanctions against Russia, many auto parts suppliers have cut imports of Russian goods, increasing pressure on foreign manufacturers. Automakers are already reeling from a shortage of semiconductors and higher energy prices.
Inflation in the US has hit a 40-year high. Housing, food, and gas prices have all gone up. Accordingly, in February 2022, the consumer price index (CPI) increased by 7.9% – the highest level since 1982.
Even recently, many suppliers in Ukraine such as Ingas, Cryoin, which specialize in providing leading neon lights had to suspend production indefinitely. Recent estimates indicate that about half of the global neon light supply comes from Ukraine, while the rest is produced in China and a host of other smaller countries.
Ingas, whose production plant is located in Mariupol, one of the cities hit hard by Russia, says its output had reached 20,000 cubic meters of neon a month before the conflict. The company’s customers come from many countries, including China, Germany and the US.
Cryoin, on the other hand, produced 15,000 cubic meters of neon a month, but was shut down shortly after the Russian attack began. The company’s facilities are based in Odesa, another Ukrainian city that has been surrounded by Russian troops.
At this point, Taiwan claims chipmakers have the neon needed to keep production running. But of course, if the war doesn’t end soon, these companies will have to find other sources to supply.
In China, domestic neon manufacturers have essentially raised prices, in some cases quadrupling, from 400 yuan per cubic meter in October last year to 1,600 yuan per cubic meter at the end of February. .
According to the US International Trade Commission, neon prices rose 600% before Russia annexed Crimea from Ukraine in 2014.
Richard Barnett, chief marketing officer of Supplyframe, which provides market intelligence to companies in the global electronics sector, said companies in other regions can start producing neon but it will take a while. from 9 months to 2 years. If so, the supply will be tight and push the price higher.
Last week, Tesla raised the price of US Model Y SUVs and Model 3 sedans by $1,000 each and some Chinese-made Model 3 and Model Y vehicles by 10,000 yuan ($1,582.40).
According to data tracked by Reuters, last year, Tesla increased the selling price of the most affordable versions of the Model 3 and Model Y in the US by about 10 times. The price of Tesla’s Model Y Long Range in the US has increased by 20% compared to January 2021, while the price of the Model 3 Long Range has increased by 10.6% during the same period.
It’s not just Tesla struggling, US electric vehicle maker Rivian Automotive says supply chain problems could cut production in half as planned, due to soaring raw material prices and constraints in the supply chain. Japan’s Toyota Motor Corporation also announced it will scale down domestic production by up to 20% from April to June to ease the strain on suppliers struggling with chip shortages and shortages. other parts.
Reference: Reuters
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