The United States inflation level is worse than reported, says Elon Musk

Elon Musk addressed shareholders while presenting Tesla’s Q1 earnings report on Wednesday.

The United States, similar to other leading economies in the world, has been battling high inflation in recent months. However, Elon Musk believes the numbers are worse than expected.

Musk said this during Tesla’s first-quarter earnings call on Wednesday. According to the Tesla CEO, he expects the inflation level to last till the end of the year. He said;

“I think the official numbers actually understate the true magnitude of inflation. And inflation appears to be likely to continue for at least the remainder of this year.”

Musk said he wants to make electric vehicles (EVs) affordable, but the increase in prices of most parts means he can’t achieve this goal yet. He revealed that Tesla suppliers are requesting 20% to 30% cost increases for parts from 2021 to 2022. Tesla added that;

“What’s keeping costs down, at least in the short term, is that we have locked in contracts with suppliers. Those modular contracts will obviously run out, and then we’ll start to see potentially significant cost increases.”

Tesla, similar to other major companies in the United States, is grappling with rising costs for raw materials, commodities and outbound logistics. The company wrote;

“Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. In addition to chip shortages, recent COVID-19 outbreaks have been weighing on our supply chain and factory operations. Furthermore, prices of some raw materials have increased multiple-fold in recent months.”

Lithium remains one of the challenging aspects of Tesla’s operation, and Elon Musk encouraged entrepreneurs to consider getting into the business of producing lithium. He said;

“Lithium margins right now are practically software margins. It’s like, do you like minting money? Well, the lithium business is for you.”

Elon Musk was recently named the world’s wealthiest person by Forbes, with a net worth of over $260 billion. He recently submitted a bid of $43 billion to acquire social media giant Twitter.