Musk made the comments at the electric vehicle makers’ annual shareholder meeting on Thursday.
While he joked that “making macroeconomic prognostications is a recipe for disaster,” the businessman said his personal guess is “that we are past peak inflation and that we will have a recession. … I’m just guessing here, this is total speculation. But I would guess it’s a mild recession for … 18 months or something like that,” Musk said.
Musk said he based his forecast on the commodity prices Tesla is being asked to pay for the materials it needs to make its vehicles in advance, which he said gives the company insight into where prices are generally heading.
“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 said.
He said that the prices Tesla is seeing are trending downward, which “suggests that we are past peak inflation” and that he believes “inflation is going to drop rapidly” at some point in the future.
Musk’s prediction comes amid a challenging economic environment and inflation levels at 9.1 percent, which has prompted economists to predict an impending recession, although many share differing views with regard to when such a recession may happen and how devastating it may be.
Recession Debate Continues
Some economists say the United States is already in a “technical recession,” although the National Bureau of Economic Research, the organization that declares when the country enters a recession, has yet to do so.
Still, multiple companies across the United States have laid off employees and slowed down new hires in recent months; most recently Walmart, which announced a string of corporate layoffs this week.
Musk previously said in June that Tesla would look to cut its salaried workforce by 10 percent over the next three months, amounting to a roughly 3.5 percent reduction in total headcount at the company.
The businessman said at the time that the company had grown “very fast on the salaried side” but had previously expressed his concerns about the economy.
Musk also revealed in June that its Gigafactories in Texas and Berlin are “losing billions of dollars” owing to battery shortages and supply chain disruptions prompted by government-mandated COVID-19 lockdowns in China.
During Thursday’s shareholder meeting, Musk also said that Tesla is still hoping to produce the Cybertruck in mid-2023 but will not be able to sell them with the same specifications and pricing that were originally provided in 2019 due to the impacts of inflation.
“I hate to give a little bit of bad news,” Musk said. “But there is no way to have anticipated the inflation we have seen and various issues.”