American entrepreneur Elon Musk predicts mild 18-month recession, teases possible share buybacks

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Cofounder of six companies including rocket producer Space X, electric car maker Tesla, and tunneling startup Boring company; Elon Musk has predicted a mild 18-month recession.

The South African- born American Entrepreneur made this prediction during the 2022 annual Tesla company shareholders meeting which took place yesterday, August 4th.

CEO Elon Musk who spoke on a variety of topics including macroeconomics and the possibility of share buybacks also said that Tesla intends to produce 20 million vehicles annually by 2030. Elon said he thinks that it will take approximately a dozen factories, with each factory producing 1.5 million to 2 million units per year to achieve Tesla’s 2030 goal.

Proceedings from the Tesla 2022 shareholders meeting, showed that one of the several questions asked by Tesla investors was; how the company plans to spend its money in the coming years and his thoughts on the global economic outlook.

Musk jokingly answered  “Making macroeconomic prognostications is a recipe for disaster,”

” We are past peak inflation, and likely to see a relatively mild recession lasting for about 18 months,” he said.

Could it be that the CEO based his economic analysis on the commodity prices Tesla is being asked to pay for the raw materials it needs to make its electric vehicles?

“We do get a fair bit of insight into where prices of things are going over time because when you’re making millions of cars, you have to purchase commodities many months in advance of when they’re needed,” he further said.

Russia’s war on Ukraine and the ongoing Covid pandemic in China have hampered Tesla’s Shanghai factory this second quarter of the year, chain snarls supply has worsened and there have been labor problems and part shortages throughout Tesla’s auto industry.

In an answer to how Tesla plans to use its capital in the coming years, Mr. Musk stated that Tesla will primarily increase its capital expenditures and research and development spending as fast as they can without wasting it.

He also hinted that “a sort of share buyback is possible,” but that itself depends on what the company’s future cash flow looks like.

Tesla, Inc., formerly Tesla Motors is an electric vehicle manufacturer and clean energy company cofounded by billionaire Elon Musk. Tesla is the biggest seller of plug-in electric vehicles, it is also the world’s all-time bestselling plug-in EV with more than 800,000 sold before the start of 2021.

Tesla, Inc., operates vehicle assembly plants in Shanghai; Fremont, California; Austin, Texas; and outside of Berlin in Germany.

Tesla is also known to produce batteries at a factory in Sparks, Nevada. A venture it jointly operates with Panasonic.

CEO Elon Musk proudly announced on Thursday that Tesla recently produced its 3 millionth car and is hoping to announce a new factory location later this year.

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