Electrek reports Tesla, Inc. increased the price for Model 3 and Model Y this week after nickel prices skyrocketed in the most epic short squeeze in history.
Before we dive into Tesla pricing, it's important to understand that "Nickel is the single biggest component in terms of cost" for an electric vehicle, said Sam Abuelsamid, principal research analyst at Guidehouse Insights.
"So any price change will have a significant impact," Abuelsamid said.
In the last few weeks, nickel trading on the London Metal Exchange (LME) soared over disruption from key supplier Russia after the invasion of Ukraine. The jump in nickel eventually led to a violent short covering that sent prices more than doubled to over $100,000 per ton earlier this week. The LME said it suspended trading of the metal on Tuesday because of extreme volatility.
Nickel is a critical ingredient in lithium-ion battery cells. At Monday's closing price of $48,000, a 100-kilowatt-hour battery (which has about 145 pounds of nickel) would require about $3,100 worth of nickel, which is more than double last year's average cost. At $100,000, the nickel price for the battery would be about $6,200. Last year, nickel prices for a battery cost $1,200 on average.
Automakers have long-term supply contracts to avoid surging prices, but if higher prices persist, they may be subjected to higher costs that would be passed along to the consumer.
Back to Electrek, who reported Model 3 and Model Y prices for long-range versions increased $1,000 this week.
The Model 3 Long Range price increased by $1,000 from $50,990 to $51,990. Since last year, the price has risen by $4,000.
As for the Model Y, Tesla increased the Long Range and Performance versions by $1,000. Model Y has seen its price jump $10,000 over the last 12 months.
"Those new price increases today come just as the price of nickel is surging due to the crisis in Ukraine leading to embargoes and sanctions on Russia, the world's third-biggest producer of nickel – a material critical to high-energy-density battery cells found in some electric vehicles," Electrek said.
Tesla has yet to state if the price increases are related to nickel's price spike or one of the largest weekly commodity spikes ever.
Tesla has been equipping some base Model 3s with an iron-phosphate battery cell that doesn't require nickel to keep battery costs low.
Not even electric cars can escape today's out-of-control inflationary environment.