Elon Musk believes inflation is worse than reported and will likely continue through 2022

During Tesla’s first-quarter earnings call on Wednesday, CEO Elon Musk state that he believes inflation is worse than report and will likely last the entire year in 2022.

According to Labor Department data released Tuesday, annual inflation in the United States rose 8.5 percent in March. Reaching a 40-year high as Russia’s brutal invasion of Ukraine drove up energy costs.

Musk’s comments came in response to an analyst’s question about recent Tesla vehicle price increases. How Tesla plans to fulfill its long-standing goal of bringing fully-electric vehicles to the masses to lessen people’s reliance on fossil fuels.

Musk stated that Tesla continues to want to make EVs as affordable. As possible but that pricing can be complex in shifting macroeconomic conditions.

“I believe the official numbers understate the true magnitude of inflation,” said the CEO. And it appears that inflation will continue for at least the rest of the year.” As a result, according to Musk. Tesla suppliers are requesting cost increases of 20% to 30% for parts from 2021 to 2022 in some cases.

“We have locked in contracts with suppliers, keeping costs down, at least in the short term. However, those modular contracts will obviously expire, and then we’ll see potentially significant cost increases,” Musk warned.

Tesla is particularly concerned about rising costs for raw materials. Commodities, and outbound logistics, according to Musk and other Tesla executives on the Q1 call.

“Challenges around supply chain have remained persistent. Also our team has been navigating through them for over a year,” Tesla wrote in its shareholder deck. Aside from chip shortages, recent COVID-19 outbreaks have strained our supply chain and factory operations. Furthermore, the prices of some raw materials have risen several times in recent months.”

The CEO encouraged entrepreneurs to consider entering the lithium production business to supply Tesla also the rest of the growing battery also electric vehicle industry.