Elon Musk warns of tough economy, says Tesla not immune

At the company's annual shareholder meeting in Austin, Texas, Tesla CEO Elon Musk spoke about car demand, making more money than competitors in a slow economy, and also said he would conduct a third-party audit in cobalt mines that supply Tesla with a key ingredient to make batteries.

In a sign of tough times even for Tesla, the market leader in electric cars, Musk said the company would try to advertise its vehicles, something it has not done before.

"Tesla is not immune to the global economic environment. I expect things to be just at a macro economic level difficult for at least the next 12 months," said Musk.

At the meeting, shareholders voted to appoint the company's co-founder and former chief technology officer, JB Straubel, to the board. Proxy advisory firm Glass Lewis had urged investors to vote against Straubel's appointment, citing worries about his independence.

They also rejected a proposal to publish a report that sought to establish succession plans for Chief Executive Musk.

Musk has been under pressure to address investor concerns about the lack of a clear successor, softening demand and delays of some new models, as well as his involvement in social media platform Twitter, which he bought in October.

"There was a short-term distraction because I had to do major open-heart surgery on Twitter to ensure the company's survival," Musk said on Tuesday. Last week he announced that NBCUniversal's former advertising head, Linda Yaccarino, will succeed him as Twitter CEO and that he will focus on products and technology at the company.

In April, Musk had said Tesla would prioritize sales growth ahead of profit after it missed its margin target due to aggressive price cuts.

Musk sent an email to staff on Monday that the company can make no new hires unless he personally approves them, including contractors, and asked executives to "think carefully" before submitting hiring requests.

Tesla shareholders on Tuesday swiftly voted with the board's recommendations on nearly all proposals. The meeting was attended by shareholders who won invitations via lottery and was also live-streamed.

Tesla shares closed flat at $166.52 on Tuesday and rose 0.6 percent in after-hours trading. The stock has dropped about 60 percent from its record high in November 2021, hurt by Musk's distraction with Twitter and worries about softening demand for electric cars.

BOARD NOMINEES

Straubel, who is CEO of Redwood Materials, a battery recycling and materials company, is considered a potential successor to Musk, according to Gene Munster, managing partner at Deepwater Asset Management.

Shareholders also voted to re-elect Musk and Chair Robyn Denholm as board members.

Proxy advisory firm ISS has recommended a vote against Denholm, citing concerns about a lack of scrutiny over the use of Tesla shares as collateral for loans by Musk and his brother, Kimbal.

SUCCESSION

Investors voted against publishing a report on "Key-Person Risk." The proposal sought to identify key persons and establish succession plans.

Musk said at last year's shareholder meeting that he will stay at the automaker as long as he is useful. In November, Tesla director James Murdoch testified in court that Musk had identified someone as a potential successor.

Tesla board members have discussed CFO Zach Kirkhorn as a possible successor as CEO, the Wall Street Journal reported last week, citing a person familiar with the matter.