Russia is a major exporter of nickel, which is used to make stainless steel and electric vehicle batteries. So it’s no surprise that the Russia-Ukraine war is sending nickel prices soaring.
The London Metal Exchange suspended nickel trading Tuesday after prices jumped 250% in two days, cresting above $100,000 a ton early in the day.
This surge could push up the price for electric cars substantially, says a commentary from Morgan Stanley analyst Adam Jonas, cited by CNBC.
As of the writing of his report, which came out Monday, nickel’s price jump would mean a $1,000 rise in the input cost for an average U.S. electric vehicle, he said.
“Where will the battery metals come from? Our metals and mining team were already forecasting a nickel shortfall by 2026,” Jonas said.
Automakers might be able to obtain nickel from Indonesia, but its nickel is more difficult to use for electric car batteries, he said.
The nickel turmoil also will affect auto company’s earnings, Jonas said.
“It’s probably time for investors to take auto company earnings forecasts down,” he said.
Shares of major electric vehicle makers have slumped in recent months, with Rivian Automotive (RIVN) and Lucid (LCID) getting hit by disappointing production numbers. Tesla (TSLA) has slid 21% so far this year, Rivian has plunged 58% and Lucid has dropped 34%.
As for Tesla, Morningstar analyst Seth Goldstein thinks it’s overvalued. He puts fair value at $700, compared to a recent quote of $835.85.
In January, he wrote that his short-term and long-term forecasts for the company were unchanged after its fourth-quarter earnings report.
“However, we have reduced our medium-term growth assumptions,” Goldstein said. “We see the affordable sedan and SUV vehicle platform being delayed, as management prioritizes the completion of other new vehicles first.”
