The Impact of the Russia-Ukraine War on Tesla: Evidence from ARIMA Model

This paper examines the impact of geopolitical events, specifically the Russia-Ukraine war, on Tesla’s stock price. This study utilizes an autoregressive integrated moving average (ARIMA) model to analyze weekly and monthly stock closing prices from February 2022 to June 2023. The core objective of the study is to examine what impact an increase in oil prices due to the Russia-Ukraine war would have on the electric vehicle industry, specifically Tesla Inc. The main findings showed that escalating tensions led to an initial spike in Tesla’s stock price, driven by higher oil prices and the urgency for alternative energy sources. However, while eventually stabilizing at the end of the forecast period, supply chain disruptions caused by the war led to a significant drop in inventory values. This study contributes to the financial literature by integrating geopolitical risk assessment into stock price forecasting models, demonstrating how ARIMA can be used in the context of unforeseen international crises. The study highlights the need for resilience in global supply chains and highlights potential areas for policy intervention. It also demonstrates that investors view geopolitical risk as an integral part of their investment strategy, further emphasizing the need for tools such as ARIMA in financial forecasting and decision making.