The price of nickel is surging higher this week as Russia's invasion of Ukraine could potentially severely limit the global supply of the metal. In turn, the cost of producing an electric vehicle is getting higher by the day, Morgan Stanley warns. "It's probably time for investors to take auto company earnings forecasts down," Morgan Stanley's Adam Jonas said in a note Monday. Nickel is a key material used in electric vehicle batteries. The analyst said that as of the note's writing, the surge in nickel prices represents around a $1,000 increase in the input cost of an average electric vehicle in the U.S. Nickel prices on Tuesday jumped even higher, briefly touching a new record above $100,000 a metric ton. "Where will the battery metals come from? Our metals and mining team were already forecasting a nickel shortfall by 2026," added Jonas. The analyst noted automakers could maybe turn to Indonesia for additional supply but the nickel from that region is harder to turn into the kind that can be used in an electric car. Shares of automakers that produce electric vehicles are down in the last one month as the war caused commodity prices to soar. In the last one month, shares of Tesla and Rivian are down 13% and 30% respectively. General Motors and Ford are off by 10% and 20% respectively over the same period. Jonas has a sell rating on Ford and Lucid Group and a buy rating on Tesla. —CNBC's Michael Bloom contributed reporting.
