Tesla and SpaceX Facing Significant Inflationary Pressure

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Tesla and SpaceX Facing Significant Inflationary Pressure
14 Mar 2022
6 min read

News Synopsis

Elon Musk, CEO of Tesla Inc said that US electric vehicle maker and his rocket company SpaceX are facing significant inflationary pressures on raw materials and logistics.

Elon Musk also mentioned the inflation rate outlook and said his companies were not the only ones suffering from this, retweeting an article titled, Russia conflict sent commodity prices to their highest levels since 2008.

Russia's invasion of Ukraine has pushed up the prices of metals used in cars, from aluminium in car bodies to palladium in catalytic converters and high-grade nickel in batteries for electric cars.

Although metals have not been subject to Western sanctions so far, some shippers and auto parts suppliers are avoiding Russian products, and automakers are already suffering from chip shortages and rising energy prices. 

The shares of Tesla closed 5% lower on Friday. The automaker has also raised the prices of its US Model Y SUVs and Model3 Long Range sedans by $1000 each. Other than Tesla, Rivian Automotive has also said that it could cut its planned production in half, due to the soaring prices of raw materials and supply chain constraints. 

Toyota Motor Corp has also said that it would scale back domestic production by up to 20% for April-June to ease the strain on suppliers struggling with shortages of chips and other parts.