Elon Musk says SpaceX and Tesla facing significant inflation pressure

Prices of metals used in automobiles have increased after Russia invaded Ukraine

Elon Musk has said Tesla and SpaceX are facing significant inflationary pressures following Russia’s invasion of Ukraine.

The multibillionaire tweeted on Monday saying the electric car manufacturer and aerospace company are seeing “significant recent inflation pressure in raw materials and logistics,” adding that his companies are “are not alone”.

Following the Russian invasion, prices of metals used in automobiles such as aluminium, palladium and nickel have started to increase as some shippers and parts suppliers are refusing to trade in Russian goods – although countries opposed to the war haven’t imposed sanctions on metal imports from Russia yet.

Experts said doing so may add more pressure on automobile manufacturers who are already reeling from a global chip shortage since the beginning of the Covid pandemic and higher energy prices since the Ukraine invasion in late February.

Mr Musk retweeted a report in the Financial Times which cautioned, citing multiple experts and analysts, that commodity prices could soar to the highest level since 2008 because of the invasion.

The conflict in eastern Europe, which entered the 19th day on Monday, is triggering a surge in global commodity prices, including those of wheat, oil and natural gas.

This infographic, created for The Independent by Statista, shows the countries least and most dependent on Russian natural gas (Statista/The Independent)

The prices of aluminium and coal have soared since the beginning of this month and could have ripple effects on several global businesses and consumers.

Although sanctions on Moscow have so far avoided natural resources like metals and minerals needed by the manufacturing sector, global banks, insurers, as well as shipping companies are boycotting Russia to reduce risks to their reputations.

This infographic by Statista shows the countries which import the most Russian oil (Statista/The Independent)

Due to this self-sanctioning, the demand for other sources of raw materials as well as oil is tightening, and long-established trade flows, routes and supply chains are starting to shift.

“This rally will stoke a torrent of inflationary pressures as the building blocks of the global economy get ever more costly. We believe commodities are now marching to levels where demand destruction — through still higher prices — will become prevalent,” Ehsan Khoman, head of emerging markets research at Mitsubishi UFJ Financial Group, told FT earlier this month.

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