Continue reading Tesla’s first-quarter earningsCall Wednesday CEO Elon MuskHe said that he believes inflation is more severe than it is reported, and will likely last for all of 2022.

Inflation in the United States rose 8.5% annually in March to hit a 40-year high as Russia’s brutal invasion of Ukraine pushed up energy costs, according to Labor Department data released Tuesday.

Musk made the remarks in answer to questions from an analyst about recent price hikes for Tesla cars and how they might be affected. TeslaIt plans to fulfill its long-standing goal to bring fully electric cars to mass markets, partly to decrease people’s dependence on fossil fuels.

Musk stated that Tesla wants EVs to be affordable, and he regretted the fact that prices can change in response to changing macroeconomic conditions.

He stated, “I believe the official figures actually underestimate the true extent of inflation.” The CEO said that inflation is likely to remain at this level for the duration of at least one year. Musk stated that Tesla suppliers may request 20%-30% price increases on parts between 2021 and 2022.

We have secured contracts with suppliers to keep costs low, at least for the near term. Musk cautioned that those modular contracts will eventually expire and then there could be significant price increases.

Musk said that Tesla faces rising prices for commodities, raw materials and outbound logistics.

The following is a description of the product: shareholder deckTesla stated that the challenges surrounding the supply chain are persistent and his team has struggled to navigate them over the past year. Our supply chain has been affected by recent COVID-19-related outbreaks. Many raw materials are also seeing a significant increase in prices over the past few months.

Entrepreneurs were encouraged by the CEO to explore the possibility of starting a business producing lithium for Tesla and other electric vehicles.

He stated that “literally software margins” are the lithium margins at present. It’s almost like asking yourself, “Do you enjoy minting money?” The lithium business might be for you.

An analyst wanted to see if Musk might need to increase prices in light of recent price rises for Tesla vehicles in China and the US.

Musk denied that Tesla prices are currently set in anticipation for future costs. This is the most accurate estimate of current pricing for a future vehicle, which will likely be six to 12 months away.

He caveated by saying that “obviously we don’t have control over the macroeconomic climate” and “whether or not governments keep printing large amounts of money.”