Elon Musk Predicts ‘Challenging’ Year For Economy—And Tesla Isn’t Immune

Topline

Tesla CEO Elon Musk sees “challenging” times ahead for his company and the greater economy over the next 12 months—one of many topics touched on in a shareholder meeting that featured talk of new products and production updates.

Key Facts

Musk said Tesla is not immune from a global economic environment that could leave several companies bankrupt, pointing to rising interest rates amid the Federal Reserve’s campaign to tame inflation by hiking rates to their highest level in over a decade, which is expected to slow the economy.

In response to a question, Musk said Tesla will begin engaging in traditional advertising and “see how it goes,” reversing the billionaire’s long-held aversion to advertising.

The CEO later told CNBC’s David Faber he’s open to advertising because Tesla’s strategy of promoting its products on social media is “preaching to the converted”—though he offered few specifics on his plans.

Musk also said the company will begin delivering its first Cybertrucks some time later this year, following years of delays, and estimated the company could produce 250,000 to 500,000 Cybertrucks a year depending on demand.

Two new products, which Musk estimated would make in excess of 5 million units a year combined, were teased with a photo showing a silhouette of an unnamed vehicle.

Musk talked about the company’s use of cobalt in its batteries and said Tesla would conduct third-party audits to ensure no child labor is used in mining, following scrutiny into the Democratic Republic of Congo’s mining industry.

Forbes Valuation

We estimate Musk’s net worth at $175.9 billion, mostly due to his stakes in Tesla and SpaceX, making him the world’s second-wealthiest person.

Key Background

The shareholder meeting was held less than a month after Tesla’s first-quarter financial results were released. The company reported $22.33 in first-quarter revenue and $2.51 billion in profit. In April, it cut prices for some of its vehicles in the U.S. for the sixth time this year—a move that has created profit margin concerns. Musk has been criticized for his preoccupation with Twitter, which he purchased last year for $44 billion, a concern the CEO was able to address at the meeting thanks to his naming of Linda Yaccarino as Twitter’s next chief executive.

Crucial Quote

Musk coined his takeover of Twitter as a “short-term distraction,” adding that he had to conduct “major open-heart surgery” to ensure the company’s survival.

Further Reading

Tesla 2023 shareholder meeting: Musk says Tesla will deliver production Cybertrucks this year (CNBC)

Tesla shareholders vote to appoint co-founder Straubel to board (Reuters)

Tesla’s shareholder meeting is all about succession (The Verge)