In the annual shareholder meeting for Tesla on 16 May, 2023, CEO Elon Musk warns of tough times ahead for Tesla due to economic slowdown. Even the multinational automotive company is not resistant to the ongoing financial crisis in U.S., which is going to continue for the next year as well.
The meeting that took place in Austin, Texas, witnessed Musk dismissing speculations in the market about his potential resignation as CEO of Tesla, while also discussing two upcoming mass-market models that the company is currently working on. He further reiterated that deliveries of the long-awaited Cybertruck pickup would commence this year.
Tesla fell short of its margin goal in the first quarter as it implemented significant reductions in vehicle prices amid a sluggish economy and increasing competition. Acknowledging the challenging circumstances faced by even industry leader Tesla, Musk revealed plans to venture into advertising for the company’s vehicles, which is a departure from their previous approach. Amidst the economic decline, Musk agrees that a recession is evident in the coming days, confirming the worst fears of many. This is also noted by Herbert Ong, “The $TSLA Milestones Guy” and CEO of Juva Health.
Elon Musk: “Will be a challenging 12 months. Tesla is not immune to global economic environment. I expect the Macroeconomic level difficult in next 12 months. Tesla will weather through this.
But that said, it wont be darkness forever, My best guess is global economy turns…
— Herbert Ong (@herbertong) May 16, 2023
However, every cloud has a silver lining. The recession will not be forever, and the economy will soon bounce back and start growing again. Any long-term investor in Tesla can rest their worries, as Musk believes that after the slowdown, Tesla will be in quite a good position in terms of doing business and raising capital and investment.
“My best guess is that the global economy turns around in roughly 12 months and then Tesla will be in EXTREMELY good position. So anyone who is a long-term investor will do extremely well.” – @elonmusk $TSLA pic.twitter.com/CGm5CR3wOZ
— Teslaconomics (@Teslaconomics) May 16, 2023
No Question of Resignation
Despite concerns about his independence raised by proxy advisory firm Glass Lewis, shareholders at the meeting voted to appoint JB Straubel, the co-founder and former chief technology officer of the company, to Tesla’s board. JB Straubel, currently the CEO of Redwood Materials, a battery recycling and materials company, has been considered a potential successor to Elon Musk, according to Gene Munster, managing partner at Deepwater Asset Management.
Investors expressed their frustration with the board’s lack of oversight, particularly in light of Musk’s acquisition of the social media platform Twitter for $44 billion in October. They believe that the board should have taken steps to ensure that Musk remains focused on Tesla.
In a recent announcement, Elon Musk revealed that Linda Yaccarino, the former advertising head of NBCUniversal, will be taking over as the CEO of Twitter. Musk stated that he will be shifting his focus towards the development of products and technology within the company.
He expressed confidence in Twitter’s current state, describing it as being in a “stable place.” Furthermore, he emphasized that the future endeavors of Twitter will require a relatively smaller time investment compared to the preceding six months.
James Murdoch, a director at Tesla, provided testimony in a court case in November where he stated that Elon Musk had named an individual as a potential successor. During a recent vote, investors opposed the release of a report concerning Key-Person Risk. The proposal aimed to identify important individuals within the company and create plans for their succession. However, Elon Musk rejected the resulting rumours when asked about the same by journalists.
Also Read: U.S. Citizens are Bracing for Potential Recession says Nationwide
Introduction of CyberTruck and Roadster
During the meeting, Elon Musk expressed Tesla’s ambition to manufacture approximately 250,000 Cybertrucks annually, with production numbers contingent upon demand. He further stated the company’s intention to commence production of the highly anticipated next-generation Roadster electric sports car in the upcoming year, after experiencing significant delays.
Additionally, Musk briefly alluded to the development of two new mass-market models, aiming to produce more than 5 million of these vehicles. However, he did not provide further details regarding these forthcoming models.
Addressing concerns about ethical sourcing, Musk affirmed that Tesla would undertake a third-party audit to ensure the absence of child labor in cobalt mines, as cobalt is a crucial component in battery manufacturing.
On Tuesday, Tesla shareholders promptly approved the majority of proposals in accordance with the board’s recommendations. They also voted to re-elect Elon Musk and Chair Robyn Denholm as board members. A proxy advisory firm, ISS, had advised against voting for Denholm due to concerns regarding the oversight of Tesla shares being used as collateral for loans by Musk and his brother, Kimbal.
Thus, Elon Musk warns of tough times ahead for Tesla due to economic slowdown. Its stock closed at $166.52 on Tuesday, showing no significant change, but saw a 0.6% increase in after-hours trading. Since reaching its all-time high in November 2021, the stock has experienced a decline of approximately 60%.
