On the company's first-quarter earnings call, Musk said that he thinks inflation is worse than reported and that it will last all year.
The Labor Department reported Tuesday that the US inflation rate hit a 40-year high in March.
In response to an analyst's questions about recent price increases forTesla vehicles, and how the company plans to make good on its longstanding goal of bringing fully electric vehicles to the mass market, Musk spoke.
Musk lamented that pricing can be a challenge in the face of shifting macroeconomic conditions, but said that he wants to make EVs as affordable as possible still.
The CEO thinks the official numbers understate the true magnitude of inflation. In some cases, Musk said, suppliers are requesting 20% to 30% cost increases for parts from 2021 to 2022.
We have locked in contracts with suppliers, which is keeping costs down in the short term. Musk warned that the modular contracts would run out and that there would be cost increases.
Musk and other executives said on the Q1 call that they are grappling with rising costs for raw materials and commodities.
Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. The recent COVID-19 outbreak has weighed on our supply chain and factory operations. The prices of some raw materials have gone up multiple-fold.
The CEO encouraged entrepreneurs to get into the business of producing lithium to supply the growing battery and electric vehicle industry.
He said that lithium margins are almost software margins. The business of the lithium is for you.
Analysts wanted to know if Musk thought the company would need to raise prices again soon after the recent price hikes for their cars in the US and China.
Current prices are for a vehicle that will be delivered six to 12 months from now.
He caveated that by saying that we don't control the macroeconomic environment and that the government keeps printing money.
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