Over the past year, automobile makers and other tech industries have grappled with the semi-conductor chip shortage. This was in large part due to the pandemic and a surge in demand for computers and devices used to learn or work from home. Additionally, many automakers made the wrong move – canceling orders for new chips in the expectation that demand for new vehicles would drop off. When it didn’t, car companies couldn’t maintain normal production schedules. Although the semiconductor shortage has improved slightly, a new issue may be joining the party: Nickel. That’s right nickel, no not the five-cent coin, but the element. You know, “Ni” on the periodic table, atomic number of 28 that has a silvery-white lustrous look with a slight golden tinge. If you don’t, well all you need to know is nickel is a key element used in the production of cars, specifically, in the lithium-ion batteries used in most electric vehicles.
Unfortunately, Russia which is currently involved in an unprovoked invasion of Ukraine is also a key supplier of nickel. Given Nickel was already expensive before the war, the current price increase is not helpful. Indeed, according to Morgan Stanley (As of this writing) “nickel is up 67.2% just today, representing around a $1,000 increase in the input cost of an average EV in the U.S.” With this major hike in input costs for EVs basic economics tells us there will be a price increase across the board. Keep in mind this is coming in tandem with the gasoline price hike due to the same conflict. What do you think about all the implications of the Russia-Ukraine war? And is it possible to protect your portfolio from its far-reaching implications?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.