Elon Musk predicts a recession

  • Tesla’s CEO shared his views this week at the Qatar Economic Forum when asked about the chances of a recession in the United States.
  • The automaker is hiring workers at two new plants as it seeks to ramp up production in the coming months, even as it raises prices for versions of all four models.
  • A deal to buy Twitter is still in the works, even as the Tesla CEO has publicly raised questions about the social network’s share of bot accounts.

    Tesla CEO Elon Musk has in recent weeks predicted turbulent waves for the economy in the coming months, starting with his signals about the prices of raw materials for the auto industry. The CEO said a year ago that raw material prices were driving up prices for Tesla models, and he repeated the same earlier this spring, as many other automakers began facing much higher prices for metals and other materials used to produce electric cars.

    The Tesla CEO reiterated his views this week at the Qatar Economic Forum when asked about the chances of a recession in the United States.

    “Well, I think a recession is inevitable at some point,” Musk said. “And in terms of whether there’s a recession in the near term, I think it’s more likely than not.” “It’s certainly not a certainty,” he added, hedging his statement somewhat.

    The Tesla boss noted the worsening economic outlook amid the automaker’s recently stated goal of cutting 10% of its paid employees, while increasing hourly workers, just weeks after the automaker opened two new plants in Berlin-Brandenburg, Germany and Austin, Texas. The decision to cut salaried employees as production slowly began at two new plants surely raised eyebrows in automakers during a fiscal quarter could provide some surprises, in large part due to weeks of layoffs in Giga Shanghai imposed by anti-virus measures. Corona virus applied by the Chinese authorities.

    However, the CEO of Tesla and SpaceX is still finalizing the Twitter purchase, a process that may have become more complex and expensive than expected.

    Tesla stock had noticeably lost its value in the weeks after the deal was first announced, as questions were raised by Musk about the number of potential bot accounts on the social network. Musk is still widely expected to complete the deal, even as more questions are asked about the site in what has become an unusual institutional move.

    It now appears that the Twitter deal has crystallized in another economic climate entirely, one without an imminent recession. As many observers have pointed out, Musk has likely been under study for months if not years, but he has now fallen on critical economic timing.

    In another sign of belief in the worsening economic climate, Tesla recently raised prices across the lineup, in another major round of price increases since March of this year.

    The latest move, rolled out without warning last week, was largely interpreted as keeping pace with increases in the cost of raw materials, which Musk had warned about months ago. The Model X received a top raise of $6000, while the longer-range Dual Motor AWD version of the Model S received a price increase of $5000. The entry-level Model S had already been above the $100,000 mark for some time, tens of thousands of dollars north of where it was just a few years ago.

    The two less expensive Tesla models, the Model 3 and the Model Y, received somewhat lower price hikes in proportion to their prices.

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