Elon Musk said that the worst of the current surge in inflation was probably past, given Tesla’s monitoring of commodity prices, but a “moderate” recession was probably in store for the U.S. that could last 18 months.

“We're seeing in most of our commodities—more than half—the prices are trending down in six months,” he said, “which suggests we are past peak inflation.” Musk, the CEO of Tesla, made the comments at the automaker's annual shareholder meeting.

In contrast to the Lehman Brothers crisis of 2008, the fundamentals of the U.S. economy remain strong, he said.

“I think inflation will drop rapidly, and we'll have a mild to moderate recession in the next 18 months,” Musk said.

The annual shareholders' meeting came two weeks after Tesla reported a jump in second-quarter profits linked to price increases.

Musk told shareholders that the EV maker will have an annual run rate of 2 million vehicles by the end of this year and will continue to build new factories to join the four it currently has in operation.

Musk said Tesla could announce a new factory location as soon as this year.

Tesla is targeting an annual output of 20 million vehicles a year, which Musk said would require 10 or 12 “gigafactories” with capacity of 1.5 to 2 million vehicles each. 

Total Tesla production in 2021 was just over 1 million vehicles, but Musk said Thursday that the current run rate was 1.5 million vehicles from four factories: Fremont, California; Shanghai; Berlin-Brandenburg, Germany; and Austin, Texas.

“If all goes as planned, we will be exiting 2022 at a 2 million annual run rate,” Musk said, adding that production in Tesla’s two newest factories, in Germany and Texas, was facing “10,000” small problems that were being solved “one at a time.”

Tesla’s newest car, the Model Y midsize crossover, is already the automaker’s biggest selling vehicle by revenue, he said, and in 2023 would be the volume leader.

The Model Y, with about 40,000 sales in Europe through June, already slightly outsold the Model 3 sedan, according to market analyst company Dataforce.

Tesla’s most anticipated new model, the Cybertruck, is scheduled to start production in Texas in the middle of next year, he said, with the first production equipment to be installed in the coming months.

Musk said the pricing and specifications for the Cybertruck had changed since reservations opened in 2019, due to inflation and other external factors.

“A lot has changed since then,” he said, adding that there was no way to anticipate inflation.

Musk touched on other topics at the meeting, which was held at the Texas factory. 

Musk said the key to Tesla’s long-term profitability is its manufacturing strategy, which aims to rethink how cars are built. He pointed to the “Giga Press,” which casts structural elements in single piece aluminum that can replace hundreds of individual welded steel parts. "Everyone will have EVs and eventually all cars will be self driving, but the thing that will be hardest to replicate is Tesla's manufacturing strategy,” he said.

Tesla hopes to have widespread Full Self-Driving (its highest level of driver assistance, which still requires the driver to pay attention) beta testing available this year in the U.S., although Mercedes has already received approval in Germany for its own “Level 3” self-driving system. “We've made some pretty significant architectural improvements” in the system, Musk said, pointing to advances in making complex left turns across traffic.

Musk also touched on CEO succession planning. With a long-term product roadmap, Musk said, “Tesla would continue to do very well even if I was kidnapped by aliens.” “I intend to stay with Tesla as long as I can be useful,” he added. “The company has a very bright future even without me.”

Peter Sigal covers the French market for Automotive News Europe