The Russian attack against Ukraine appears to have struck a chord with Elon Musk’s hopes as well. In fact, due to this war, the dream of the world’s richest man Elon Musk of bringing an affordable electric vehicle should not be shattered.
Rising raw material costs have been made worse by Russia’s invasion of Ukraine. It could sabotage Tesla CEO Elon Musk and other auto executives’ dreams of bringing more affordable electric vehicles. Industry expert Gregory Miller said prices of nickel, lithium and other materials are rising.
In such a situation, where earlier the cost of battery was continuously decreasing, now that trend can change. The battery is the most expensive part of any electric vehicle. If this happens, then the trend of adopting this technology will be shocked. What is frightening is that the industry is already grappling with supply chain disruptions and global chip shortages due to the COVID-19 pandemic.
Miller said this year could see the first year-on-year increase in the average price of lithium-ion battery cells. The conflict in Ukraine has added to this. Fears that exports from Russia, a major producer, could be disrupted, have driven nickel prices to an 11-year high. Lithium prices have also risen, more than doubling since the end of the year, as supply outweighs rising demand. Russia produces about 7% of the world’s mined nickel. It is also a major provider of aluminum and palladium.
Musk’s Tesla and startup Rivian Automotive have reported rising EV prices over the past year. It matters because mainstream consumers aren’t going to pay huge bucks for a technology that many people don’t fully accept yet. According to research firm Cox Automotive, the average EV in the US sold for about $63,000 in January.
Tesla has increased the price of its least expensive Model 3 sedan by 18% to $44,990 from December 2020, as material supplies are disrupted. Musk also said in January that Tesla was not developing the $25,000 car he promised during the 2020 Battery Day.