By Katabella Roberts
Tesla CEO Elon Musk says he expects a recession within the United States to final round 18 months, though he anticipates it will likely be “relatively mild.”
Musk made the feedback on the electrical car makers’ annual shareholder assembly on Thursday.
While he joked that “making macroeconomic prognostications is a recipe for disaster,” the businessman mentioned his private guess is “that we are past peak inflation and that we will have a recession. … I’m just guessing here, this is total speculation. But I would guess it’s a mild recession for … 18 months or something like that,” Musk mentioned.
Musk mentioned he based mostly his forecast on the commodity costs Tesla is being requested to pay for the supplies it must make its autos prematurely, which he mentioned provides the corporate perception into the place costs are usually heading.
“We do get a fair bit of insight into where prices of things are going over time, because when you’re making millions of cars, you have to purchase commodities many months in advance of when they’re needed,” he mentioned.
He mentioned that the costs Tesla is seeing are trending downward, which “suggests that we are past peak inflation” and that he believes “inflation is going to drop rapidly” in some unspecified time in the future sooner or later.
Musk’s prediction comes amid a difficult financial setting and inflation ranges at 9.1 p.c, which has prompted economists to foretell an impending recession, though many share differing views with regard to when such a recession could occur and the way devastating it could be.
Recession Debate Continues
Some economists say the United States is already in a “technical recession,” though the National Bureau of Economic Research, the group that declares when the nation enters a recession, has but to take action.
Still, a number of firms throughout the United States have laid off staff and slowed down new hires in current months; most just lately Walmart, which introduced a string of company layoffs this week.
Musk beforehand mentioned in June that Tesla would look to chop its salaried workforce by 10 p.c over the following three months, amounting to a roughly 3.5 p.c discount in complete headcount on the firm.
The businessman mentioned on the time that the corporate had grown “very fast on the salaried side” however had beforehand expressed his considerations concerning the economic system.
Musk additionally revealed in June that its Gigafactories in Texas and Berlin are “losing billions of dollars” owing to battery shortages and provide chain disruptions prompted by government-mandated COVID-19 lockdowns in China.
During Thursday’s shareholder assembly, Musk additionally mentioned that Tesla continues to be hoping to produce the Cybertruck in mid-2023 however won’t be able to promote them with the identical specs and pricing that have been initially supplied in 2019 as a result of impacts of inflation.
“I hate to give a little bit of bad news,” Musk mentioned. “But there is no way to have anticipated the inflation we have seen and various issues.”