Commodity prices have risen so much that even Elon Musk is complaining. As a result, anyone buying a car is now paying more. But the scarcity of raw materials also has a bright side, says one expert.
Commodities such as nickel, lithium, palladium and neon are scarce due to the war in Ukraine.
This has implications for car buyers: They now have to wait longer to buy a new car.
Auto prices may also continue to rise due to scarcity of raw materials.
Automakers can now switch to alternative substances.
As if rising fuel prices aren’t giving drivers enough headaches: now the war in Ukraine is making raw materials scarce — which is causing longer delivery times for new cars. As a result, car prices continue to rise.
Nickel, for example, has surged nearly 130% since the start of the year, and thus accounts for about a third of the increase in car battery costs (see box). The price of lithium has also risen about 75% since January. Palladium is more expensive than it has been in 35 years.
Ukraine produces about 70% of the noble gas neon which is exported around the world. Companies use it to make chips that are also used in electric vehicles. Supply chains are now compromised. Most memory chip makers only hold about eight weeks’ worth of neon stock, according to financial firm CMC Markets. As a result, the price of electric vehicles is rising. That was the case when Russia annexed Crimea in 2014. Now the effect appears again.
“Nickel is the biggest problem we face in lithium-ion battery production,” Tesla boss Elon Musk confirmed on Twitter. “That’s why we’re switching to iron cathodes for standard range cars.” But scarcity It’s not just nickel. Palladium and aluminum, the raw materials important to cars, are also increasingly scarce.
Overall, metals inflation is likely to push the average price of electric cars up by around 1,800 euros this year, said Konstantin Oldenburger of financial firm CMC Markets. Currently approximately CHF 1857.
Car dealer Amag is also feeling the shortage of raw materials. This makes it difficult for manufacturers to properly schedule deliveries. Therefore, it cannot be ruled out that prices will continue to rise.
Buying a new car requires patience
Russia also supplies 40 percent of the world’s palladium, according to Beat Pfiffner, deputy head of research at Schwyzer Kantonalbank. If the metal becomes scarce, it could have implications for the manufacture of automotive catalytic converters. “Car prices will likely continue to rise, especially since Ukrainian wiring harness production is also disrupted by the war,” Pfiffner said.
Russia is also important for titanium production, with a market share of around 30% – and rhodium around 15%. The country is also responsible for 5 to 10 percent of aluminium, nickel and copper production. For example, higher aluminum prices also lead to more expensive beverage cans.
Anja Schulze noted that due to the corona situation and the chip crisis, delivery times for cars have increased. If there is also a shortage of raw materials, the wait time to buy a car could increase further, said the director of the Centre for Automotive Research at the University of Zurich.
Necessity is the mother of invention
The scarcity of raw materials has at least one advantage: “When the price of raw materials rises, people become creative,” says Ferdinand Dudenhof of the Center for Automotive Research in Duisburg. Elon Musk could also use cobalt instead of nickel to make his car batteries.
Turbulent markets for raw materials could lead engineers to look for new solutions. That could make the car cheaper or better, and consumers will ultimately benefit, Dudenhöffer said.