Tesla Inc Chief Executive Officer Elon Musk said that the U.S. electric carmaker and his rocket company SpaceX are facing significant inflationary pressure in raw materials and logistics. He asked via tweet about inflation rate outlook and said his companies are not alone. Russia’s invasion of Ukraine has been ramping up the prices of metals used in cars.
While metals have not been the target of Western sanctions as yet, some shippers and auto-parts suppliers are steering clear of Russian goods. This puts more pressure on carmakers already reeling from a chip shortage and higher energy prices. Escalated by housing, food, and gas prices, the U.S. consumer inflation saw its steepest spike in the last four decades, likely cementing the case for an interest rate hike by the Federal Reserve.
Tesla’s shares, which closed 5% lower at $795.35, have lost about 25% year-to-date. The electric-car maker raised prices of its U.S. Model Y SUVs and Model 3 Long Range sedans by $1,000 each and some China-made Model 3 and Model Y vehicles by 10,000 yuan ($1,582.40). U.S. electric vehicle maker Rivian Automotive Inc said that the supply-chain issues could cut its planned production in half, citing soaring raw material prices and supply chain constraints. Japan’s Toyota Motor Corp said that it would scale back domestic production by up to 20% for April-June. This is to ease the strain on suppliers struggling with shortages of chips and other parts.