Inflation is worse than reported and is likely to continue until 2022

CEO of Tesla Inc Elon Musk attends the World Conference on Artificial Intelligence (WAIC) in Shanghai, China, August 29, 2019.

Ali’s song Reuters

During a call on Tesla’s earnings for the first quarter on Wednesday, CEO Elon Musk said he believes inflation is worse than reported and is likely to continue throughout the year in 2022.

In March, U.S. inflation rose 8.5 percent year-over-year to a 40-year high as Russia’s brutal invasion of Ukraine pushed up energy prices, according to the Labor Department on Tuesday.

Musk’s remarks came in response to analysts’ questions about the recent rise in Tesla’s car prices and how Tesla plans to achieve its long-held goal of bringing all-electric vehicles to the masses, in part to reduce people’s dependence on fossil fuels.

Musk said Tesla really wants to make EVs as affordable as possible, but regretted that prices could be a challenge in the face of changing macroeconomic conditions.

The CEO said: “I think the official figures are actually underestimating the true magnitude of inflation. In some cases, Musk said, Tesla suppliers are asking to increase the cost of parts by 20-30% from 2021 to 2022.

“What allows us to reduce costs, at least in the short term, is that we have signed contracts with suppliers. These modular contracts will obviously expire, and then we will start to see a potentially significant increase in costs, ”Musk warned.

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Tesla is particularly struggling with rising costs for raw materials, goods and outbound logistics, Musk and other Tesla executives said during a call in the first quarter.

In its share, Tesla wrote: “Problems around the supply chain remain constant and our team has been solving them for more than a year. In addition to chip shortages, the recent COVID-19 outbreaks are affecting our supply chain and factory. some raw materials have grown several times ”.

The CEO encouraged entrepreneurs to think about engaging in lithium production to supply Tesla and the rest of the growing battery and electric vehicle industry.

“Lithium stocks now are practically software profits,” he said. “It’s like, you like to mint money? Well, a cast business for you.”

With the recent rise in Tesla car prices in the US and China, analysts wanted to know if Musk thinks the company may need to raise prices again soon.

Musk said no that current prices are in anticipation of what Tesla thinks its likely cost growth will be. “Current prices are for a car that will be delivered in the future, for example, in six to 12 months, so that’s our best guess.”

But he warned that by saying “it is clear that we do not control the macroeconomic environment” and also whether “governments continue to print huge sums of money”.

Inflation is worse than reported and is likely to continue until 2022

Source link Inflation is worse than reported and is likely to continue until 2022

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