Elon Musk predicts some companies will go bankrupt

Elon Musk predicts some companies will go bankrupt

Elon Musk is predicting that some companies will go bankrupt within the next 12 months. He didn’t go as far as saying that they would be Tesla competitors, but he made it feel like given the context.

Which ones could it be?

Over the last year, Musk has often complained about macroeconomics, inflation, and interest rate hikes all affecting buying power and the general economy.

He has been predicting that this sluggish economy would likely last another year before it gets better.

At Tesla’s annual shareholder’s meeting yesterday, Musk again reiterated his views on the economy to Tesla shareholders to warn them that the next 12 months might be difficult:

It’s going to be a challenging 12 months. I want to be realistic about this. Tesla is not immune to the global economic environment. The macroeconomics levels are going to be difficult for the next 12 months.

The CEO added that he believes “a lot of companies” won’t survive:

Tesla will get through it and we will do well, but I think we will see a lot of companies going bankrupt.

Musk believes that it will leave Tesla in a great position when the economy picks up again.

He didn’t specify which companies he believes will go bankrupt, but he did mention it right after he mentioned how hard it is to make electric vehicles profitably and shared this chart showing how much money Tesla’s competition is losing:

The CEO said that Tesla is financially in a position to survive this economic downturn because of its capacity to produce EVs with a positive gross margin.

Electrek’s Take

I’ve been saying for years that many automakers won’t survive the transition to electric vehicles.

This economic downturn may accelerate things for some companies, but unfortunately, I think it will mostly affect EV startups. Unfortunately, again, I think Musk might be right about a few of them going bankrupt.

I think the bigger impact on legacy automakers is going to be felt around 2025 for those who won’t be ready with high volume of electric vehicles to compensate for a massive crash in internal combustion engine sales.

As for which companies are at risk in the 12 months, on a purely financial basis, I think companies like Fisker, Lucid, Canoo, and Lordstown are all potentially at risk.

Who else do you see at risk? Let us know in the comment section below.

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