Domino Effect on Tesla and EV Industry

Domino Effect on Tesla and EV Industry

Tesla raised the prices of its Model Y SUVs and Model 3 Long Range sedans in the United States by $1,000 each on Wednesday, as well as select China-made Model 3 and Model Y vehicles by 10,000 yuan ($1,582.40). The Model Y Long Range car's pricing in the United States has increased by 20% since January 2021, while the Model 3 Long Range sedan's price has increased by 10.6%.

The move comes amid rising raw material costs, which have been exacerbated by Russia's invasion of Ukraine, and might jeopardize Tesla CEO Elon Musk's and other auto executives' plans to introduce more cheap electric vehicles. According to analysts, rising prices of nickel, lithium, and other minerals threaten to halt or possibly reverse the long-term trend of lowering battery costs, the most expensive component of EVs, impeding greater adoption of the technology.

That's on top of a supply chain already clogged by the COVID-19 outbreak and a global chip scarcity. Rising raw material prices have the potential to postpone cost parity between EV and ICE vehicles, which could stymie greater adoption of EVs (internal-combustion engine vehicles, which now dominate the market). This year could be the first time that the average price of lithium-ion battery cells rises year over year.

One of Tesla's Production Lines

The conflict in Ukraine has only heightened the stakes, sending nickel and aluminum prices to new highs this week amid rising fears that exports from Russia, the world's largest producer, may be hampered. Lithium prices have also risen, more than doubling since the end of the year, as supply has fallen short of demand. Nornickel, Russia's largest miner, produces around 20% of the world's high purity class 1 nickel, which is used in EV batteries. Russia is also a major supply of aluminum, which is utilized in battery manufacturing.

However, oil prices, which hit their highest levels since 2008 on Monday, may act as a counterweight, stimulating increased interest in electric vehicles following years of rising demand for gas-guzzling SUVs and pickup trucks.


How Tesla Continues To Support Ukraine

Over and above activating Starlink over Ukraine, Tesla has also pledged to continue to pay its Ukrainian employees who have been summoned to their homeland for conscription. According to the source, Tesla employees across Europe, the Middle East, and Africa (EMEA) received an email on Monday.

"For any Tesla employees who is a Ukrainian national and has been asked to return to Ukraine for active duty as a reservist, we will maintain their employment and salary for [three] months, with a view to assessing after this period as needed," which was stated in an email to the company’s workforce.

During the rising tensions between Ukraine and Russia, the effort is only one of several program available to Tesla employees. HR EMEA team members have been "engaging with impacted workers as well as their supervisors to ensure we check in," according to the business.

"We will continue to ensure we provide meaningful and targeted support for our employees," the email read. This includes bolstering the Tesla EMEA Employee Assistance Program, which provides "counseling as well as multiple services and assistance for Tesla employees."

Many employees have contacted out to find out how they can help during the ongoing Ukraine-Russia situation, and the carmaker has suggested that they donate money to the following relief organizations that are assisting Ukraine:

"This is not an exhaustive list, and you can of course make donation to an organization of your choice," said Tesla in its email to staff.

Tesla's other attempts to assist Ukraine include offering free Supercharging to Tesla and non-Tesla electric vehicle owners at stations bordering Ukraine. Although Tesla does not have an official presence in Ukraine, any of the estimated 5,000 Tesla owners in the nation can take advantage of free Supercharging at chosen stations in Poland, Hungary, and Slovakia.