Elon Musk Warns of Difficult Global Economy for Next 12 Months, Says Tesla Not Immune

Tesla Chief Executive Elon Musk on Tuesday warned that the electric-vehicle maker was not immune to the global economy, which he said will be difficult for the next 12 months.

At the company's annual shareholder meeting in Austin, Texas, Musk said the Model Y SUV was on track to be the top-selling car globally in 2023, and reaffirmed that Tesla would start to deliver its long-delayed Cybertruck pickup this year.

In a sign of tough times even for Tesla, the market leader in electric cars, Musk said the company would try to advertise its vehicles, something it has not done before. "We'll try out a little advertising and see how it goes," he said.

"Tesla is not immune to the global economic environment. I expect things to be just at a macroeconomic level difficult for at least the next 12 months," said the billionaire, dressed casually in a black T-shirt and trousers.

At the meeting, shareholders voted to appoint the company's co-founder and former chief technology officer, JB Straubel, to the board. Proxy advisory firm Glass Lewis had urged investors to vote against Straubel's appointment, citing worries about his independence.

Straubel, who is CEO of battery recycling and materials company Redwood Materials, is considered a potential successor to Musk, according to Gene Munster, managing partner at Deepwater Asset Management.

Shareholders also rejected a proposal to publish a report that sought to establish succession plans for Musk.

Musk has been under pressure to address investor concerns about the lack of a clear successor, softening demand and delays of some new models, as well as his involvement in the social media platform Twitter, which he bought in October.

"There was a short-term distraction because I had to do major open-heart surgery on Twitter to ensure the company's survival," Musk said on Tuesday. Last week he announced that NBCUniversal's former advertising head, Linda Yaccarino, will succeed him as Twitter CEO and that he will focus on products and technology at the company.

In April, Musk had said Tesla would prioritize sales growth ahead of profit after it missed its margin target due to aggressive price cuts.

Musk sent an email to staff on Monday that the company can make no new hires unless he personally approves them, including contractors, and asked executives to "think carefully" before submitting hiring requests.

New Models

Musk said at the meeting that Tesla would like to produce a quarter-million Cybertrucks a year, depending on demand. He said the EV maker expects to complete the engineering and design of its next-generation Roadster sports car this year and hopes to start production next year.

He also teased two new mass-market models under development, saying he hopes to make more than 5 million of those vehicles, but did not elaborate.

Musk also said he would conduct a third-party audit to ensure there is no child labour in cobalt mines that supply the ingredient used in making batteries.

"In fact, we will put a webcam on the mine and if anybody sees any children, please let us know," he said, adding that most of Tesla's battery packs were iron-based and that Tesla used cobalt only a "tiny amount" as a binder.

Board recommendations

Tesla shareholders on Tuesday swiftly voted with the board's recommendations on nearly all proposals. The meeting was attended by shareholders who won invitations via lottery and was also live-streamed.

Tesla shares closed flat at $166.52 (roughly Rs. 13,700) on Tuesday and rose 0.6 percent in after-hours trading. The stock has dropped about 60 percent from its record high in November 2021.

Shareholders also voted to re-elect Musk and Chair Robyn Denholm as board members.

Proxy advisory firm ISS has recommended a vote against Denholm, citing concerns about a lack of scrutiny over the use of Tesla shares as collateral for loans by Musk and his brother, Kimbal.

Investors voted against publishing a report on "Key-Person Risk." The proposal sought to identify key persons and establish succession plans.

Asked about rumours that he would step down as Tesla CEO, Musk said on Tuesday: "I don't think so."

Musk said at last year's shareholder meeting that he will stay at the automaker as long as he is useful. In November, Tesla director James Murdoch testified in court that Musk had identified someone as a potential successor.

Tesla board members have discussed CFO Zach Kirkhorn as a possible successor as CEO, the Wall Street Journal reported last week, citing a person familiar with the matter.

© Thomson Reuters 2023

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