Get All Access for $5/mo

'I Am Worried': Elon Musk Signals Alarm for U.S. Economy During Tesla Earnings Call Tesla reported Q3 2023 earnings on Wednesday.

By Emily Rella

Getty Images

Elon Musk is expressing concern about the U.S. economy as high interest rates are affecting car sales.

Tesla, which reported a worse-than-expected Q3 2023 on Wednesday, down 37% from the same time last year, is using caution on profit outlooks.

"I am worried about the high-interest rate environment that we're in," Musk said while talking about plans for expansion on the company's Mexico gigafactory during the earnings call. "I just can't emphasize this enough, that the vast majority of people buying a car is about the monthly payment. And as interest rates rise, the proportion of that monthly payment that is interest increases naturally."

Related: 'Detached From Reality': Elon Musk Goes on Unprovoked Rant About Remote Work During Tesla Earnings Call

Musk said that if interest rates continue to stay the same or rise even more, then the average customer won't be able to afford to purchase a car. He explained that Tesla must find a middle ground between lowering car prices and staying competitive — while also acknowledging that there is "something to be gained on the advertising front" for its vehicles.

"I just can't emphasize again how important cost is, it's not an optional thing for most people. It is a necessary thing," Musk explained. "We have to make our cars more affordable so that people can buy it. And I keep harping on this interest thing, but I mean, it just raises the cost of the car."

On Thursday, Federal Reserve Chair Jerome Powell hinted that at the next Fed meeting in two weeks, interest rates could stay the same, thanks to strong economic growth.

Related: The Federal Reserve Is on Instagram When Not Raising Rates

However, Powell also noted that the Fed was "proceeding carefully" moving forward, which could signal new hikes come December.

"Doing too little could allow above-target inflation to become entrenched and ultimately require monetary policy to wring more persistent inflation from the economy at a high cost to employment," Powell said on Thursday. "Doing too much could also do unnecessary harm to the economy."

The current Federal funds rate is set at 5.25% to 5.50%.

Emily Rella

Entrepreneur Staff

Senior News Writer

Emily Rella is a Senior News Writer at Previously, she was an editor at Verizon Media. Her coverage spans features, business, lifestyle, tech, entertainment, and lifestyle. She is a 2015 graduate of Boston College and a Ridgefield, CT native. Find her on Twitter at @EmilyKRella.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Business News

'We Pulled Off An SEO Heist': Entrepreneur Stole 3.6 Million Pageviews From Competitors — And Your Business Could Be Next.

This has huge implications for businesses that rely on Google's organic traffic for revenue.


The Key to Real Innovation Is Cross-Pollination — Here Are 10 Ways to Implement It in Your Business

Transform your business with this unique approach to sparking innovation.

Business News

Wells Fargo Reportedly Fired More Than a Dozen Employees for Faking Keyboard Activity

The bank told Bloomberg that it "does not tolerate unethical behavior."

Business Solutions

Why Every Solopreneur Needs to Embrace AI-Powered Teams

With the right approach, solopreneurs can harness AI to drive efficiency, productivity and business growth.

Starting a Business

Spend Less Time Worrying About Your Company's Runway — And More Time Rethinking Your Strategy. Here's How.

Perceived short runways leave founders in angst. It does not have to be this way; the best way to extend the runway is the right strategy.