While the economic situation of his company Tesla is currently at its worst, and vehicle costs have risen sharply, Elon Musk thinks he has the solution. Nevertheless, it is a plan that he does not really master.
A very worrying economic situation
Currently in turmoil due to the standoff between him and Twitter – following his refusal to take over the social network – Elon Musk must also focus on his other companies, in particular Tesla, the electric car company that is not healthy.
At the end of June, we informed you of the state of the billionaire’s business, which was at its worst. Facing his shareholders, Elon Musk had admitted that the financial situation of the firm was on the verge of the abyss : “the past two years have been an absolute nightmare of supply chain disruptions“.
The reasons ? The pandemic has significantly affected the production of Tesla models, while sales are not taking off. Musk then announced a plan to reduce expenses by stopping hiring, as well as by the massive layoff of several thousand employees. The businessman therefore did not rule out bankruptcy of his business if the situation is not resolved quickly.
Rising costs? Musk has the solution
Elon Musk spoke again about the worrying situation of his firm today. According to him, another solution to relaunch its economy would be to reduce the costs of its Tesla models, which have increased in recent years by 20 to 30%. A sharp increase which is the result of a big drop in sales, as well as the Covid-19 pandemic, the War in Ukraine, but also and above all current inflation.
Thus, Elon Musk could consider lowering the prices of his Tesla, provided that the current period of high inflation subsides : “If inflation calms down, we can lower the price of cars.“, he replied in a tweet to the question of a Korean journalist.
A period of high inflation
The world is currently going through a very high period of inflation (5.8% over one year, end of June 2022 in France according to INSEE), an increase which seems unstoppable and which leads to a drop in the purchasing power of citizenswhile companies, whose margins were eroded by the crisis, had then increased their prices. A spiral that Elon Musk does not control.
It is therefore difficult to buy a Tesla today, despite the implementation of state aid systems such as the electric car at 100 euros per month. However, Tesla is increasing its margins while having a well-filled order book over several months.
In any case, inflation is not ready to stop, so Musk and his teams will have to try to find various strategies to revive Tesla’s economy. Slight clearing in the mass of dark clouds that the company is going through today, the order of new terminals compatible with other electric vehicles other than Tesla in the United States and Canada (which was not the case before). A news that should bring some new customers to the CEO.