Tesla in Commercial Ties with Aluminum Company in Russia

UTC by Ibukun Ogundare · 3 min read
Tesla in Commercial Ties with Aluminum Company in Russia
Photo: Depositphotos

Despite sanctions on several Russian organizations and individuals, Rusal has not been sanctioned. 

Many prominent names, including Tesla (NASDAQ: TSLA) CEO Elon Musk, have been supporting Ukraine amid attacks from Russia. Musk offered to keep Ukraine online through his company Skylink. In addition, the CEO provided Tesla to assemble and ship Skylink’s storage systems and equipment. The CEO has received commendations for his efforts towards Ukraine.

Aluminum is often used as an amalgam in steel manufacturing, blending with powerful, less adaptable metals like magnesium, silicon, and copper. All these materials are significant in Tesla’s production, increasing the strength of the cars but allowing them to remain relatively light. For example, the Tesla Model Y and other products manufactured at the Tesla Berlin gigafactory.

Tesla Began Buying Aluminum from Rusal in Russia in 2020

Before Russia evaded Ukraine, a leading global aluminum producer, Rusal had supplied aluminum worth millions of euros to Tesla. According to the US Geological Survey 2020 report on aluminum, Russia ranked second-largest aluminum producer with mine production of 3.6 million MT. It explains why Tesla was in business with Russian-owned Rusal. The aluminum company faced US Treasury sanctions in 2018 due to activities between its owners and the Russian government. It later originated 9% of US aluminum imports in 2020. Tesla started buying from Rusal after the lifting of the sanctions.

Questioning the commercial ties of Tesla with Russia at a time like this may seem unfair to the EV battery maker. Considerably, the world’s leading automobile makers contact Russia for their aluminum supply chain. Also, Rusal is not the only company Tesla procures aluminum from. Tesla began aluminum procurement from Russia after the announcement of building a factory in Germany. However, Moscow-based Rusal is of concern, given Moscow’s participation in Ukraine. Enterprises are under pressure to re-evaluate their relationships with Rusal and other Russian suppliers alike at this time. Buying from them will further improve the Russian economy, enriching the Russian oligarchs and Vladimir Putin’s agenda.

Despite sanctions on several Russian organizations and individuals, including Deripaska, Rusal has not been sanctioned.

President Joe Biden has advised the US Congress to join the EU in discontinuing regular commercial ties with Russia. For automakers like Tesla, this would mean inflation, and for an extensive period.

Oleg Deripaska’s Perceived Position in Russia May Affect

One of the most prolific Oligarchs in Russia, Oleg Deripaska, who is also close to President Vladimir Putin, heads Rusal. Deripaska’s home in Washington D.C was raided last October by FBI agents, but it remains unclear why he came under investigation. In 2014 and 2016, Deripaska had an issue with the FBI, with the agency requesting that he provides any information related to Russian organized crime. They also asked him of any links between the Kremlin and its interference in the 2016 presidential election. According to the New York Times, Deripaska spurned the requests, maintaining that he was not aware of any efforts to influence the election.

The question of Tesla ceasing future businesses with Rusal if Deripaska does not clearly state his stand with Putin remains unanswered. However, he has called for peace.

Tesla shares plunged 8.8% to $702.68 in the premarket session, following Russia’s invasion of Ukraine on 24th February, thereby marking its lowest trading level since August. Tesla has also dropped 12.49% in the last month and lost 4.75% in the last five days.

Rusal shares have dipped 53.61% in the last one month, over 5% more than its year-to-date record. Its last five days record says the company lost 20.45%.

Business News, News
Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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