The price of almost everything is going up. This was already the case before Russia invaded Ukraine because the pandemic disrupted supply chains worldwide. But the situation has worsened in the three weeks since the invasion.
Crude oil prices soared, pulling raw materials prices in their wake. Prices for nickel and other key metals for batteries needed by electric vehicles are at very high levels. Russia is responsible for 6% of the global aluminum supply and 7% of mined nickel. So, war and sanctions could further constrain global supplies of the metals.
Even if the prices of these materials stabilize in the coming weeks, their increase has increased the cost of batteries. And logic would say that the prices of electric vehicles would increase as well.
GM and Tesla Make a Tough Call That Rivals May Follow
Elon Musk, chief executive of Tesla (TSLA), summed it up in a recent tweet, which was followed the next day by a major price hike for Tesla cars. "Tesla & SpaceX are seeing significant recent inflation pressure in raw materials & logistics," Musk wrote to his millions of followers. It was a warning to Tesla and SpaceX customers that prices were about to increase.
Besides Tesla, General Motors (GM) and Chinese automaker BYD have also hiked the price of their cars, citing soaring costs of raw materials. So one reasonably would expect other automakers to follow suit and protect their profit margins.
TheStreet contacted the Dearborn, Mich., group to find out whether it, too, plans to raise the prices of its electric vehicles. Ford's response was clear: "Nothing to add specifically on pricing for now," a spokesperson told TheStreet in an emailed statement.
The spokesperson explained that the automotive group was closely monitoring developments on the pricing front. They also said that Ford's exposure to raw materials mined or shipped through Russia and Ukraine is limited: "It’s worth noting that we have very limited direct sourcing from Ukraine and Russia."
TheStreet Quant Ratings rates Ford as a Buy with a rating score of B.
Here are more of the top electric vehicle stocks to watch this week:
General Motors
General Motors (GM) started deliveries of its Hummer EV Edition 1 Pickup in December and already it appears someone looking to flip the massive vehicle for nearly three times its starting price. It's a huge increase, but the numbers aren't that shocking when you consider how limited (and special) the car is. This isn't a marked-up Toyota Corolla or even a really hot sports car. It's very collectible that, while probably not worth people are paying, is worth quite a bit.
A post on the Instagram page @americanmusclehd displayed a photo of what was described as a "Brand New Hummer Edition 1" that came "with every option available." The vehicle is being sold for a stunning $325,000, much higher than the starting price of roughly $110,000. However, the limited launched series is sold out. Someone posting on a private Facebook group called Wholesale Car Club was selling a Hummer for "$310,000 or best offer."GMAuthority noted in a post that the vehicles listed on Instagram and Facebook might be one and the same "as both are listed as being #59 in the limited First Edition production run."
TheStreet Quant Ratings rates General Motors as a Buy with a rating score of B.
Rivian
Rivian (RIVN) has something to prove and the young manufacturer of electric vehicles, recently presented as one of Tesla's great rivals, knows it. The company knows that investors, consumers, and rivals now want to see if it can establish itself as an automaker that can manufacture vehicles on a large scale. Rivian has just confirmed the appointment of a new chief operating officer. Rivian insists on Klein's expertise in vehicle production and in electrification. It's as if Irvine, Calif.-based firm, wanted at all costs to convince that it made the right choice.
The young electric vehicle manufacturer has recently poured cold water on investors' hopes by announcing a pessimistic outlook for 2022. And worse, Rivian did not give the impression that it had solved its biggest problem: how to produce a lot of cars to satisfy the growing demand for electric vehicles. On the contrary, Rivian said it could produce as many as 50,000 vehicles at its site in Normal, Ill,, but would manufacture only half that number. The company, which produces three vehicles -- the R1T electric pickup truck, the R1S electric SUV, and the the RCV electric commercial van -- attributed this setback to supply-chain disruptions.
TheStreet Quant Ratings does not have a rating for Rivian.
Volkswagen
Volkswagen (VOLKAY) plans to spend some $2.2 billion to build a new manufacturing facility for its Trinity electric vehicle. That will be built near its main plant in Wolfsburg, 140 miles away from Tesla's plant. Construction is to begin as early as spring 2023, with the net carbon-neutral Trinity model rolling off the assembly line from 2026.
Volkswagen said it is "seeking to attract new groups of customers and tap additional sources of income" while making autonomous driving available to many people by 2030. While Volkswagen was making its announcement, Tesla was taking the battle to Volkswagen's home turf by launching a recruitment campaign for its Gigafactory in Berlin, just two days after obtaining the permit.
TheStreet Quant Ratings does not have a rating for Volkswagen.
Tesla
You wouldn't be able to tell by the company's stock performance, but Tesla is having a pretty bad week. Earlier this week, Tesla announced price increases across its entire range of vehicles. It was the electric vehicle maker's second price increase this month after it increased the cost of some of its long-range models last week.
The Model 3 Rear-Wheel Drive saw its price increase to $46,990 from $44,990 while the Long Range version of the vehicle saw its price increase to $54,490 from $51,990. On the highest end of the spectrum, the Model X Tri Motor now costs $138,990 after previously costing $126,490. Inflation is the reason for the price hikes, according to Musk. But inflation induced-price increases are just one of the fires Tesla is battling this week as the companies production in China.
Tesla seems determined to extend its dominance in the highly lucrative electric vehicle market. Musk's firm wants to push its advantage over its competitors as much as possible. The Musk team has quietly obtained clearance from the Environmental Protection Agency to produce a variant of the electric SUV Model Y. We don't have many details about this mysterious car, which appeared on the website FuelEconomy.gov, from the U.S. Energy Department. This suggests that the agency has already tested the new car.
TheStreet Quant Ratings rates Tesla as a Hold with a rating score of C+.
Mercedes-Benz
Luxury automaker Mercedes-Benz said Wednesday that it's opening a battery plant in Bibb County, Ala. as Mercedes continues the drive to an all-electric future in a bid to catch up to Tesla. The company said up to 600 jobs will be created at the facility. Mercedes-Benz said it will produce the EQS SUV and EQE SUV in its plant in Alabama, as part of a global push to produce all-electric vehicles at seven locations on three continents.
Like many other auto companies, Mercedes-Benz is attempting to get a piece of the market currently dominated by Tesla, the top EV company by market capitalization. Last month, the company's production chief Joerg Burzer said in an interview with Reuters that Mercedes expects to have factories producing exclusively EVs by the second half of the decade but will steer clear of building EV-only plants.
TheStreet Quant Ratings does not have a rating for Mercedes-Benz.
