Elon Musk Warns of Challenging Economic Climate, Acknowledges Tesla’s Vulnerability

During Tesla’s annual shareholder meeting in Austin, Texas, CEO Elon Musk cautioned that the electric vehicle giant is not immune to the global economic challenges anticipated over the next 12 months. Despite being a market leader in electric cars, Musk expressed the expectation of macroeconomic difficulties and revealed plans for Tesla to explore advertising, a departure from its previous practices.

Musk addressed various topics, including car demand, the company’s financial performance in a sluggish economy, and the intention to conduct a third-party audit in cobalt mines, a crucial source for Tesla’s battery production.

In response to economic uncertainties, Musk stated, “Tesla is not immune to the global economic environment. I expect things to be just at a macroeconomic level difficult for at least the next 12 months.” Dressed casually in a black T-shirt and trousers, Musk acknowledged the need for Tesla to adapt to the evolving economic landscape.

During the meeting, shareholders voted to appoint JB Straubel, Tesla’s co-founder and former chief technology officer, to the board, despite concerns about his independence raised by proxy advisory firm Glass Lewis. Additionally, a proposal to publish a report establishing succession plans for Musk was rejected by shareholders.

Musk, who has faced investor concerns about succession planning, softened demand, and delays in new models, provided insights into his recent focus on Twitter. He emphasized the distraction caused by his involvement in major changes at Twitter and announced the appointment of Linda Yaccarino as the new CEO, allowing him to concentrate on products and technology at the social media platform.

Acknowledging short-term distractions, Musk highlighted the company’s commitment to prioritizing sales growth over profit, as outlined in an April email to staff. The email also introduced new hiring restrictions, requiring Musk’s personal approval for any new hires, including contractors.

Despite concerns, Tesla shareholders largely voted in alignment with the board’s recommendations, re-electing Musk and Chair Robyn Denholm as board members. ISS, a proxy advisory firm, recommended voting against Denholm due to concerns about the use of Tesla shares as collateral for loans by Musk and his brother.

While Musk stated last year that he would remain at Tesla as long as he is useful, discussions about potential successors, including CFO Zach Kirkhorn, have surfaced among Tesla board members, as reported by the Wall Street Journal.

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