Elon Musk says Tesla not immune to tough economy that he foresees

SAN FRANCISCO/BENGALURU (May 17): Tesla Inc chief executive officer Elon Musk warned on Tuesday that the electric vehicle (EV) 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 played down market rumours that he may step down as CEO of Tesla, touched upon two new mass-market models it is developing, and reaffirmed that deliveries of its long-delayed Cybertruck pickup would start 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," said Musk, who is also CEO of Twitter.

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

Tesla missed its margin target in the first quarter after it aggressively cut vehicle prices in the face of a slowing economy and rising competition.

Not stepping down

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.

Investors expressed frustration that the board failed to make sure that Musk is focused on Tesla after he bought social media platform Twitter for US$44 billion 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.

He said Twitter is now in a "stable place" and "the amount of time that Twitter will take going forward is relatively small compared to the last six months".

One shareholder asked about rumours that he would step down as Tesla CEO, adding "Say it ain't so." Musk replied: "It ain't so."

In November, Tesla director James Murdoch testified in court that Musk had identified someone as a potential successor.

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

Two new models, roadster

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 hopes to start production of its long-delayed next-generation Roadster electric sports car next year.

He also briefly mentioned 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.

Tesla shareholders on Tuesday swiftly voted with the board's recommendations on nearly all proposals.

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

Proxy advisory firm ISS had 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.

Tesla shares closed flat at US$166.52 on Tuesday and rose 0.6% in after-hours trading. The stock has dropped about 60% from its record high in November 2021.