Friday, May 24, 2024

Musk Says Biden Inflation Much Worse Than Reported; Some Costs Up by 30%

'What’s keeping costs down at least in the short term is that we have locked in contracts with suppliers...'

(John RansomHeadline USA) In a conference call with investors, Tesla CEO Elon Musk said that he thought that inflation was running higher than the Biden administration’s official numbers.

“I think the official numbers actually understate the true magnitude of inflation, so. And that inflation appears to be likely to continue for at least the remainder of this year,” said Musk, according to a transcript of the call provided by Seeking Alpha.

Musk said that suppliers for Tesla are asking for 20% to 30% increases for next year, and the only thing keeping prices down is that Tesla has existing contracts that lock in prices right now.

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

Meanwhile, one economist ripped the Biden administration for the so-called “pause” on student loan payments, saying those deferred or forgiven payments are helping to fuel inflation, too.

“This latest blunder by the Biden administration—further extending the moratorium on student loan repayments—is adding to price increases in at least three ways,” E.J. Antoni, a research fellow in regional economics at the Heritage Foundation, told Fox News.

First, the extra money supply made available because borrowers don’t have to repay student loans help to drive prices up, said Antoni.

Next, after promising to not extend the moratorium on student loan payments, the Biden administration broke its pledge, adding confusion to the markets.

And finally, deferring student loan payments is allowing people to resist entering the job market, putting additional price pressure on wages.

For companies like Tesla, which has a large waiting list for its products, inflation 12 months from now can have a huge effect on the final cost and consequently the final profit or loss the company makes.

“[O]bviously, we don’t control the macroeconomic environment,” and whether or not “governments keep printing vast amounts of money,” said Musk, according to CNBC.

Musk told investors that the company can do very little about the inflationary environment created by the government and to view the company’s guidance with that knowledge.

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