Tesla CEO Elon Musk: Fed operating with too much 'latency' on rate hike decisions

SPEAK FOR THEMSELVES. THIS IS A MATTER OF OPINION. STATISTICALLY, SAFER THAN ANYTHING ELSE. >> YOU MENTIONED AFFORDABILITY AS SOMETHING YOU DISCUSSED DURING YOUR MEETING. ALSO, WE DISCUSSED IT A BIT ON THE CALL, THE EARNINGS CALL RECENTLY AS WELL. IN RELATION TO THE FEDERAL RESERVE RAISING INTEREST RATES, ALSO, THE MONTHLY COST FOR TYPICAL 12 MONTHS. YOU THINK IT WILL BE TOUGH, AS YOU HAVE SAID SEVERAL TIMES. >> YEAH. EVERYONE, NOT JUST TESLA. >> UNDERSTOOD. >> SO, I MEAN, SIMPLY, YOU KNOW, YOU CAN THINK OF RAISING THE FED RATE AS SOMEWHAT OF A BRAKE PEDAL ON THE

ECONOMY, FRANKLY. IT’S MAKING A LOT OF THINGS MORE OFFENSIVE. SUDDENLY, THINGS THAT HAVE CREDIT AND THEN DOWNSTREAM EFFECTS WITH THINGS THAT AREN’T EVEN INVOLVED WITH CREDIT. IF THE CAR PAYMENTS OR YOUR HOME MORTGAGE PAYMENT IS ABSORBING MORE OF YOUR MONTHLY BUDGET, THEN YOU HAVE LESS MONEY TO BUY OTHER THINGS. ACTUALLY, IT AFFECTS EVERYTHING, EVEN THOSE THINGS THAT AREN’T BOUGHT UP BY CREDIT. >> RIGHT. >> MY CONCERN WITH THE WAY THE FEDERAL RESERVE IS MAKING DECISIONS IS THAT THEY’RE JUST OPERATING WITH TOO MUCH LATENCY. BASICALLY, THE DATA IS SOMEWHAT STALE. SO, FEDERAL RESERVE WAS SLOW TO

RAISE INTEREST RATES, AND I THINK NOW, THEY ARE GOING TO BE SLOW TO LOWER THEM. THAT APPEARS TO BE THE CASE. >> IT MAY WELL BE. WE SPENT A LOT OF TIME TALKING ABOUT THAT AS WELL, ON CNBC, AND

PERHAPS TOO MUCH. WHEN IT COMES TO LATENCY, THAT TAKES ME TO PRICING. YOU DISCUSSED THE LACK OF LATENCY AND YOUR OWN ABILITY TO UNDERSTAND EXACTLY WHAT’S GOING ON IN THE MARKET FOR THOSE CARDS. AS OPPOSED TO MANY OF THE LEGACY AND OTHER COMPETITORS. >> YES. WE HAVE REAL-TIME INFORMATION ON DEMAND. SO, WE KNOW HOW MANY PEOPLE

PLACE AN ORDER FOR A TESLA FROM YESTERDAY. THE COMPUTER CALCULATES THAT ALL , AND LITERALLY, EVERY DAY, WE GET, YOU KNOW, AN AUTOMATED EMAIL TO THE STAFF THAT SAYS HOW MANY PEOPLE PLACED AN ORDER, WHICH COUNTRIES, FOR WHICH CARS. SO, WE KNOW THE ORDERS FOR YESTERDAY. AND YOU DON’T WANT TO OVERREACT TO THESE THINGS, BECAUSE SOMETIMES, YOU GET LITTLE DIPS FOR REASONS THAT ARE HARD TO EXPLAIN. >> DO YOU LOOK AT THEM EVERY DAY? >> YEAH. BUT LIKE I SAID, YOU DON’T WANT TO OVERREACT, YOU KNOW, IF THE WEEK IS SLOW ORSON, DON’T WANT TO

OVERREACT TO THAT. BUT IF YOU LOOK AT THE TREND, SAY, FOR OVER A TWO-WEEK SPAN WAS >> THAT, YOU CAN SAY, FOR SOME REASON, THIS DEMAND IS LESS THAN IT WAS, OR ITS HIGHER. >> KNEW ADJUST PRICING? >> YEAH. >> TO THAT, I MEAN, ARE YOU ALMOST LIKE AN AIRLINE AT THIS POINT, IN TERMS OF WE’RE A DYNAMIC PRICING MODEL? >> YES. AND SO, BASICALLY, WE ADJUST OUR PRICING TO MATCH DEMAND. WE DID A BIG PRICE DROP IN Q-1. JANUARY IS GENERALLY CAR-BUYING TIME. THERE’S SEASONALITY TO THIS. GENUINELY — JANUARY IS OFTEN THE WORST MONTH.

SO, WE DID THE BIG RICE DROP, THEN RECENTLY, WE DID A PRICE INCREASE. SO, AS I MENTIONED TO THE AUDIENCE, THE REALITY IS THAT ALL COMPANIES DO — ALL CAR COMPANIES MAKES AN INFANT ADJUSTMENTS TO THE MSRP NUMBERS ON CARS, AND THAT IF DEMAND IS HIGH, DEALERS WILL GET SOME PREMIUM OF THE MSRP. IF DEMAND IS LOWER, THEY WILL HAVE MANUFACTURER INCENTIVES. SO, YOU CAN ACTUALLY SEE A BIG DIFFERENCE OVER THE COURSE OF, SAY, SIX MONTHS FOR ALL CA