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Musk warns Tesla shareholders to expect a “challenging” year

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Tesla CEO Elon Musk warned shareholders on Tuesday to expect a difficult year due to a volatile global economy and high interest rates.

“It’s going to be a challenging 12 months,” Musk said at Tesla’s annual shareholder meeting. He added: “Tesla is not immune to the global economic environment.”

Mr Musk’s pessimistic prediction came in an otherwise upbeat delivery to a friendly crowd at Tesla’s factory in Austin, Texas. He largely ignored criticism from activist investors on various matters, including accusations racial discrimination at its California factoryand whether the company was hostile to unions or whether its board did a good job of overseeing management.

But he promised activists that Tesla would investigate whether any suppliers of cobalt, a raw material for batteries, using child labour.

“We’re going to do a third-party audit,” he said shortly after Courtney Wicks, executive director of Investor Advocates for Social Justice, asked shareholders to vote for an investigation into cobalt mining.

“In fact,” Mr. Musk said, “we’re going to put a webcam on the mine. If anyone sees any children, please let us know.”

Shareholders confirmed the company’s nomination of JB Straubel to its board despite criticism from activist investors that he was too close to Mr Musk. Last month, eight investment funds and activist groups urged Tesla shareholders reject the nomination of Mr. Straubel, who was a Tesla executive for years before leaving in 2019 to found a battery and materials recycling company. Mr. Straubel “is clearly a company insider and is not an appropriate choice for a board that already lacks independence,” the investors wrote.

Activists also complained that they were unable to present as many shareholder proposals as at previous shareholder meetings due to what they characterized as a deliberate attempt by the automaker to stifle dissent.

In October, Tesla moved its annual meeting from August to May, giving shareholders two months less to submit proposals. Tesla announced the new proposal deadline, Dec. 22, at the end of a 60-page regulatory filing, and most activist investors overlooked the change.

“It was really tricky,” said Kristin Hull, CEO of Nia Impact Capital, an Oakland, Calif., firm that previously challenged Tesla’s policy of requiring employees to handle discrimination complaints. before the arbitrator rather than in court.

Tesla did nothing wrong in pushing the deadline, according to the Securities and Exchange Commission ruling.

Mr. Musk and Tesla’s board members dismissed activists’ complaints of discrimination, pointing to the company’s strong earnings and revenue growth as evidence that it was doing exceptionally well.

Some investors saw signs that Mr. Musk was responding to some of the criticism from shareholders when he announced last week that he would name Linda Yaccarino as chief executive of Twitter, the social media company that Mr. Musk acquired last year. Hiring Ms. Yaccarina could free up Mr. Musk to spend more time running Tesla. Investors have complained that Twitter has drawn Mr Musk’s attention away from Tesla at a time when the carmaker faces slackening demand and increased competition, prompting it to cut prices.

Tesla also faces criticism from Washington. A group of eight senators led by Richard Blumenthal, Democrat of Connecticut, called on Tesla this month to stop requiring employees and car buyers to resolve complaints before arbitrators.

The letter said the practice “prevents workers and consumers from bringing discrimination claims and consumer safety complaints to court — effectively shielding the company from both liability and public scrutiny.”

Mr. Musk was apparently more interested in talking about Tesla’s plans to eventually produce 20 million cars, double what the world’s largest automaker, Toyota, produces in a typical year. He said Tesla would soon unveil two new models, without giving details. And he insisted that when the economic downturn ends in a year or so, Tesla will be stronger than its competitors.

“Good times follow bad times,” he said.

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