Soaring metal costs could push new car prices even higher

The cost of a new car in the U.S. could soon rise by thousands of dollars, as some metals used by automakers to build cars, such as nickel and palladium, skyrocket in price.

According to S&P Global Mobility, price increases are likely to affect electric vehicles more. That’s because nickel is used to make batteries found in Tesla’s Model Y, Audi e-tron, Mercedes EQS, and other electric cars. For example, the price of an EQS, which starts at $ 102,000, is expected to rise to $ 11,000 due to higher metal prices, researchers at S&P Global Mobility said. Low inventory has already caused distributors to do so increase the prices of the cars they have in stock.

Even higher car prices could appear at dealerships within three months, depending on activity in commodity markets, an expert said. Vehicle costs are rising as inflation raises the price of everything from food and rent to clothes and appliances. Consumer prices in February grew at an annual rate of 7.9%said the U.S. Department of Labor on Thursday, the fastest rate of inflation since 1982.

“If we continue to see all these higher material prices, this will ultimately result in a higher price,” Matteo Fini, an automotive supply chain expert at S&P Global Mobility, told CBS MoneyWatch.

The average price of a new car has risen 12% from a year ago, according to inflation data released Thursday by the U.S. Department of Labor, while used car prices have risen an impressive 41%. A typical new car now costs $ 46,404, according to the Kelley Blue Book. The average price of a used car is approximately $ 29,000according to Edmunds.

The price per ounce of palladium used to make catalytic converters started the month at $ 2,589 an ounce and on Thursday it had risen to $ 3,084. Nickel prices rose from $ 25,438 per tonne on March 1 to $ 48,211 on Thursday. Nickel rose so fast this week, reaching a record $ 100,000 a tonne, that the London Metal Exchange stopped business so Tuesday.

Aluminum also saw a record price drop last Friday, but has since fallen to about $ 3,328 per tonne.

He Ukraine The war is driving up metal prices as more and more US and European companies cut ties with Russian companies that produce aluminum, nickel and palladium. Russia is home to Norilsk Nickel, the world’s largest producer of nickel and palladium. In all, 40 percent of the metal materials used by automakers come from Russian companies, Fini said.

Higher metal prices, combined with a global shortage of semiconductors during the pandemic, they make it even harder for carmakers to sell cars. Fini said these factors are creating “rising price pressure” for many carmakers.

Electric vehicle maker Rivian said last week it would raise its prices by $ 12,000 for reserved cars due to higher raw material costs. The company overturned its decision after customers complained on social media.

Ford, GM and Stellantis, Chrysler’s parent company, did not return MoneyWatch’s requests for comment on the impact of metal prices on vehicle prices. Toyota declined to comment.

Carlos Tavares, CEO of Stellantis, told reporters last week that the self-sanctioning of Russian products by carmakers is contributing to pre-existing cost pressures in the pandemic-linked industry.

“We have an escalation of costs that comes from raw materials and energy that will put more pressure on the business model,” Tavares told Reuters.