Tesla Feels Inflation Pressure

Elon Musk, the Chief Executive of Tesla, said the US electric carmaker and his rocket company SpaceX are facing significant inflationary pressure in raw materials and logistics.

The geopolitical crisis Between Russia-Ukraine has caused the ramping-up of metals’ prices used in cars, from aluminum in the bodywork to palladium in catalytic converters to the high-grade nickel in electric vehicle batteries, logically the drivers are going to foot the bill.

While metals have not been the target of Western sanctions as yet, some shippers and auto-parts suppliers are steering clear of Russian goods, putting more pressure on carmakers already reeling from a chip shortage and higher energy prices.

The US consumer inflation saw its steepest spike in the last 4 decades, escalated by food, gas and housing prices. It is very likely cementing the case for an interest rate hike by the US Federal Reserve.

Tesla’s shares, which closed 5 percent lower at US$795.35 on last Friday, have lost about 25 percent year-to-date.

Last week, Tesla raised prices of its US Model Y SUVs and Model 3 Long Range sedans by US$1,000 each and some China-made Model 3 and Model Y vehicles by RMB10,000.

Musk in a tweet also asked about inflation rate outlook and said his companies “are not alone,” retweeting an article saying the Ukraine-Russia conflict sent commodity prices to their highest levels since 2008.

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