Electric cars could soon become significantly more expensive – especially those from Tesla. The price of the Tesla Model Y could increase by as much as $8,000 by the end of the year. The cause lies in the aftermath of the Ukraine war.
The Ukraine war has had an extreme impact on the global economy. Supply bottlenecks and sanctions against Russia are driving up prices. Raw materials have become significantly more expensive about a month after the start of the war.
This increase could now impact the cost of electric cars. Popular car models, especially the Tesla Model Y, could become significantly more expensive due to the supply bottlenecks that have arisen.
The price of this model could therefore increase by almost 8000 dollars. That comes from a report by the auto analysts S&P Global Mobility, which was published this month and is available to the US automobile magazine “Automotive News”. This is also the Tesla model that will initially be produced in the Gigafactory in Grünheide, which officially opened on Tuesday.
The cost of battery raw materials for the Mercedes-Benz EQS could also increase: by $11,000 compared to 2021. Ola Källenius, CEO of the Mercedes-Benz Group, said last week that the German carmaker wanted to stick to its investment plans for electromobility despite the increased costs.
War in Ukraine causes nickel price to rise sharply
The main reason for the forecast price increase is the shortage of the metal nickel, an essential component of most electric car batteries. Car manufacturers use nickel as an alternative to cobalt, which has already been criticized for possible human rights violations in Congo.
Russia plays a huge role in the nickel markets; it is the world’s third largest supplier of this metal. Nornickel, the world’s largest nickel producer with vast assets in Siberia, is authorized to sell a special form of nickel on the London Metal Exchange, where all nickel trading is conducted – the number of authorized companies is limited.
At the beginning of March, the price was then at times more than 100,000 US dollars per ton. Trading on the London Commodities Exchange was subsequently suspended for a week. By way of comparison, over the past ten years, nickel has traded between $10,000 and $20,000 a ton.
‘It is clear that at current prices, any price reduction associated with the economies of scale of batteries will be at least offset by increased input costs,’ the report says.
It’s also clear that if high prices persist into 2023 and beyond, the likelihood of a delay in the tipping point for cost parity between internal combustion engines and electric vehicles – a key metric for measuring battery electric vehicle adoption – increases significantly.
Tesla: Search for alternative sources of nickel
Automakers, which depend on commodities like nickel, have already started looking for ways to protect themselves against future crises. For example, VW has started buying nickel directly from mining companies.
And the German chemical group BASF, which produces nickel and cobalt for car batteries, no longer wants to conclude contracts with Nornickel because of the Ukraine war. Other manufacturers have indicated that they have the same intentions. Europe and the USA will presumably try to extract more raw materials from their own countries.
However, it will probably be years or even decades before new mining operations are established. This is due to approvals and financing that have to be implemented in advance. Until then, higher prices must be expected.
Car manufacturers are converting production
Mercedes announced that about $2.2 billion of its assets in Russia are at risk should the country expropriate the properties of foreign companies that have turned their backs on Russia over the Ukraine war. A proposal by the Russian legislature envisages taking temporary control of companies with a foreign share of more than 25 percent.
The Stellantis Group announced that it would relocate its van production from Russia to Western Europe and put its investment plans in Russia on hold for the time being. In response to the war, VW CEO Herbert Diess announced that the company intends to expand production in China and North America.
While BMW announced that it intends to fully restart two plants in Germany and one in Great Britain that had been shut down due to bottlenecks, Audi closed a plant in Germany just last week. However, BMW also expects lower profit margins for the 2022 financial year. S&P Global Mobility also lowered its forecasts for global vehicle production this year and next by 2.6 million vehicles each.
The assumed rapid increase in prices comes at a very unfavorable time for the automotive industry. Manufacturers are currently planning numerous new electric car models, but rising prices could reduce consumer acceptance of electric cars, warn the analysts at S&P Global Mobility.
Quellen: Automotive News, The New York Times