Elon Musk says global economy is past peak inflation

Commodity and component costs of Tesla are trending down over the next six months, signalling cooling of price pressures, the billionaire says

Elon Musk, chief executive officer of Tesla, says inflationary pressures on the global economy is tapering. AP
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Elon Musk, chief executive of Tesla and the world’s richest person, said he sees signs the global economy is “past peak inflation”.

Speaking at the electric vehicle maker’s annual shareholder meeting, Mr Musk said Tesla’s commodity and component costs are trending downwards over the next six months. He also reiterated that he expects a mild recession that could last 18 months.

“The trend is down, which suggests we are past peak inflation,” Mr Musk said at Tesla’s Austin, Texas headquarters.

“I think inflation is going to drop rapidly” at some point in the future, he added.

Central banks have embarked on a path of policy-tightening as inflation pressures consumers and corporate bottom lines. In the US, consumer prices increased by 9.1 per cent in June from a year earlier, and US Federal Reserve officials say the price gains have yet to slow. The next print on inflation comes August 10.

“We sort of have some insight into where prices are headed over time,” Mr Musk said, citing Tesla’s need to buy raw materials often months in advance of when they’re used.

“The interesting thing that we are seeing now is that most of our commodities, most of the things that go into a Tesla — not all, but more than half — the prices are trending down in six months.”

While Tesla has a global purview on input costs and consumer health, Mr Musk cautioned that making macroeconomic prognostications is “a recipe for disaster” and said his comments amounted to a “guess” and “total speculation”. The chief executive also warned that trends could change.

Reservation holders and future customers of Tesla’s upcoming Cybertruck may still be affected by inflation, Mr Musk suggested.

The pickup — inspired by the flying cars in 1982 film Blade Runner — was unveiled in November 2019, and “a lot has changed” since then, he said.

At the time the company started taking reservations, Mr Musk announced a $39,900 starting price.

“The specs and the pricing will be different,” Mr Musk said. “I hate to give a little bit of bad news. But there is no way to have anticipated the inflation we have seen and various issues.”

Updated: August 06, 2022, 4:30 AM