Electric-car makers should rethink raw material supply chains -RBC

Adient

14/03/2022 14:18

March 14 (Reuters) - Electric-car makers may have to rethink
how they source raw materials as the surge in commodity prices
due to Russia's invasion of Ukraine puts pressure on their
profit margins, analysts at RBC wrote in a note on Monday.
    Prices of everything from oil to metals such as nickel and
palladium used in electric vehicle manufacturing have soared as
the crisis in Ukraine escalated.  urn:newsml:reuters.com:*:nL3N2VH2A2
    "Just turning on the lights in the plant and transportation
of goods cost more now and is a margin pressure," RBC analyst
Joseph Spak wrote in the note.
    A sustained increase in raw material prices rather than a
short-term shock can become an issue for automakers, especially
as many have limited ability to implement further price hikes,
according to the note.
    "Either way, the lesson for autos is to re-think value
chains, especially as the industry moves to battery electric
vehicles," Spak wrote, noting the recent jump in nickel prices
could translate to a $1,000-$2,000 increase in the cost of a
battery pack for an electric-car maker.
    A variety of input prices, including for lithium, nickel,
cobalt and copper, could move "a lot" in the next few years due
to mismatches in demand and supply, he added.
    Even electric vehicle leader Tesla  TSLA.O  is seeing
"significant" inflation for raw materials and logistics, its
Chief Executive Elon Musk said on Sunday.  urn:newsml:reuters.com:*:nL3N2VH0HP

 (Reporting by Aniruddha Ghosh in Bengaluru; Editing by Krishna
Chandra Eluri)
 ((Aniruddha.Ghosh@thomsonreuters.com; 91 83 83 81 2416;))