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Elon Musk Acknowledges Tesla’s Vulnerability to Challenging Economic Conditions as Anticipated

Elon Musk, CEO of Tesla Inc, acknowledged on Tuesday that the company is not immune to the challenges of the global economy, which he anticipates will remain difficult for the next 12 months.

Speaking at the company’s annual shareholder meeting in Austin, Texas, Musk addressed rumors of him stepping down as CEO of Tesla and provided updates on the company’s upcoming models. He also confirmed that deliveries of the long-awaited Cybertruck pickup would commence this year.

In a notable shift, Musk mentioned that Tesla would explore advertising its vehicles, a departure from their previous marketing approach. He emphasized the impact of the global economic environment on Tesla, stating that he expects macroeconomic conditions to pose difficulties over the next year.

Tesla faced challenges in the first quarter as it struggled to meet its margin target after implementing aggressive vehicle price cuts amid a slowing economy and increased competition.

During the meeting, shareholders voted to appoint JB Straubel, Tesla’s co-founder and former chief technology officer, to the board. While some concerns were raised about Straubel’s independence, he is considered a potential successor to Musk. Shareholders expressed frustrations over Musk’s focus on Tesla following his acquisition of Twitter for $44 billion in October. Musk clarified that the Twitter acquisition was a temporary distraction and that he would prioritize products and technology at the social media platform.

Responding to speculation about stepping down as Tesla CEO, Musk firmly stated that it was not the case. He had previously identified someone as a potential successor, as revealed by Tesla director James Murdoch’s testimony in court.

Musk shared updates on Tesla’s plans, mentioning the production target of a quarter-million Cybertrucks per year based on demand. He also expressed hope for the start of production of the next-generation Roadster electric sports car in the coming year. Additionally, he briefly mentioned two new mass-market models under development, without providing further details.

Addressing concerns about child labor in cobalt mines, which supply the ingredient used in making batteries, Musk pledged to conduct a third-party audit and even proposed placing webcams in the mines for public vigilance. He clarified that Tesla primarily uses iron-based battery packs, with cobalt playing a minor role as a binder.

Tesla shareholders supported the board’s recommendations on most proposals, including the re-election of Musk and Chair Robyn Denholm as board members. However, proxy advisory firm ISS had raised concerns about the use of Tesla shares as collateral for loans by Musk and his brother, Kimbal.

Tesla’s stock closed flat at $166.52 on Tuesday, with a 0.6% increase in after-hours trading. The stock has experienced a decline of approximately 60% from its record high in November 2021.

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