Elon Musk the founder and CEO of both Tesla Inc. (TSLA) and SpaceX believe that the two companies are both facing a significant risk of inflation arising from raw materials and logistics. Musk made this revelation on Twitter where he is mostly active.
In his tweet, Musk also acknowledged it’s not his companies alone which are staring at a great inflation risk attaching a link to an article saying the Ukraine-Russia conflict sent commodity prices to their highest levels since 2008.
Russian invasion to Ukraine has been driving up the prices of metals used in cars ranging from aluminum in the bodywork to palladium in catalytic converters to the high-grade nickel in electric vehicle batteries.
The price increase will be pushed to the buyers of the cars and this without a doubt will result to sales decline since automakers especially electric vehicle makers have been looking into ways to lower EV prices so as to make the affordable.
So far, United States and her Europeans allies have not imposed metal-related sanctions to Russia, however, some shippers and auto-spares suppliers have been avoiding Russian goods which will worsen the situation considering that the automotive industry has been facing a global chip shortage and a rise in energy prices.