Musk on Interest Rates, Economic Uncertainty and Work at Home

Tesla CEO Elon Musk spent much of a call with analysts and investors Oct. 18 on the electric car maker’s earnings discussing what he sees as the risks from high interest rates, consumer uncertainty, and the “paycheck-to-paycheck” pressures on American workers.

He described Tesla’s cost reduction efforts as “digging a tunnel with a spoon,” and called people pushing work-from-home policies privileged and out of touch.

Here are some of his quotes on those issues.

On interest rates and the affordability of EVs

“A large number of people are living paycheck-to-paycheck and with a lot of debt. They’ve got credit card debt, mortgage debt. So, that’s the reality for most people. It’s sometimes difficult for people who are high-income earners, and I would say would be someone who is earning over $200,000 a year to understand what life is like for someone who is earning fifty or sixty or $70,000 per year, which is most people.”

“If our car cost the same as a (Toyota) RAV4, no one would buy a RAV4, or, at least, they would be very unlikely to.” But since many American car buyers can’t afford to wait for a tax credit, “our car is still much more expensive than a RAV4, when you look at it that way,” he said.

On economic uncertainty and consumer sentiment

“I think there’s still quite a few shoes to drop on the bad credit situation. Commercial real estate, obviously, is in terrible shape. You know, credit card interest rates are usurious with over 20% interest rates, which, over time becomes extremely punishing.”

“I don’t want to be going into top speed into uncertainty. There are a lot of wars going on in the world as well.”

“I apologize if I’m more paranoid than I should be, because that might also be the case, because I have PTSD from 2009, big time. And 2017 through 2019, were no picnic either. So, you know, the auto industry is also somewhat cyclic. People hesitate to buy a new car if there’s uncertainty in the economy.”

On cost reductions for Tesla

“It’s like Game of Thrones for pennies. I mean, as a first approximation, if you’ve got a $40,000 car and roughly 10,000 items in that car, that means each thing, on average, costs four bucks. So, in order to get the cost down, say, by 10%, you have to get 40 cents out of each part, on average. It is a game of pennies … It does feel like digging a tunnel with a spoon at times.”

On work-from-home policies

“These are some real Marie Antoinette vibes from people who say why doesn’t everyone work from home. What about all the people that have to come to the factory and build the cars, and all the people who have to go to the restaurant and make your food and deliver your food? It’s like, what are you talking about? I mean, how detached from reality does the work-from-home crowd have to be while they take advantage of those who cannot work from home.”

This article was provided by Reuters.