MUSK SAYS TESLA, SPACEX SEE SIGNIFICANT INFLATION RISKS

Mon 14 March 2022:

Elon Musk, the CEO of Tesla Inc, said on Sunday that his company and his rocket company, SpaceX, are under substantial inflationary pressure in raw materials and logistics.

Musk also asked about the outlook for inflation rates in a tweet, noting that his companies “are not alone,” retweeting an article claiming that the Ukraine-Russia conflict had pushed commodity prices to their highest levels since 2008.

What are your thoughts about probable inflation rate over next few years?

— Elon Musk (@elonmusk) March 13, 2022

The price of metals used in automobiles has risen as a result of Russia’s invasion of Ukraine, from aluminum in bodywork to palladium in catalytic converters to high-grade nickel in electric vehicle batteries, and drivers are set to foot the tab. While metals have so far escaped Western sanctions, some shippers and auto-parts suppliers are avoiding Russian goods, adding to the strain on automakers who are already dealing with a chip scarcity and rising energy costs.

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 on Friday, have lost about 25% year-to-date.

Last week, Tesla raised the prices of its Model Y SUVs and Model 3 Long Range sedans in the United States by $1,000 each, as well as some Model 3 and Model Y vehicles built in China by 10,000 yuan ($1,582.40).

Rivian Automotive Inc, a U.S. electric vehicle manufacturer, said last week that supply-chain concerns could slash its planned output in half, citing rising raw material prices and supply-chain bottlenecks as reasons. Toyota Motor Corp. of Japan said it would cut domestic output by up to 20% in April-June to relieve pressure on suppliers dealing with chip and other part shortages.

Late on Sunday, Tesla and SpaceX did not immediately answer to Reuters’ requests for comment.

SOURCE: INDEPENDENT PRESS AND NEWS AGENCIES

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