Elon Musk To Cathie Wood: Not Sure About The Long Run But Inflation 'Pinching Hard' Short-Term

Tesla Inc TSLA CEO Elon Musk said on Monday the electric vehicle maker is seeing strong inflationary pressure in the short term.

What Happened: Musk was responding to popular money manager Cathie Wood’s view that inflation has not taken off and that she expects deflation to play out in the near future. 

Wood, CEO at Ark Invest and a Tesla superbull, has maintained she’s not concerned about inflation and rising interests as much as the cracks in the commodity markets, which could pose a bigger risk.

See Also: Cathie Wood Maintains Inflation To Prove Temporary, Says 'Cracks' In Commodity Markets Evident

The veteran investor on Monday disputed Twitter Inc TWTR and Square Inc SQ CEO Jack Dorsey’s theory on hyperinflation and how rising prices are going to change everything. 

Wood contested that deflation would overcome the supply chain-induced inflation that is wreaking havoc on the global economy and that deflation will start to play out sometime after the holidays.

“Because businesses shut down and were caught flat-footed as goods consumption took off during the coronavirus crisis, they still are scrambling to catch up, probably double- and triple-ordering beyond their needs,” Wood said.

Musk, however, said he was not sure about the long-term but Tesla is seeing “strong inflationary pressure” in the short term.

Why It Matters: Tesla has made multiple price hikes this year for its electric vehicles. Musk earlier this year dubbed the global supply chain pressure, especially in raw materials, as the reason behind the price hikes.

See Also: Cathie Wood Uses Tesla Q3 Deliveries As Example To Chide Traditional Automakers For Hiding Behind 'Chip Shortage'

Tesla shook off supply chain issues to deliver record profit and robust operating margins for the third quarter. CFO Zach Kirkhorn told investors in a post-earnings call that pricing has been really difficult over the last couple of quarters and that Tesla is trying to build as many cars as it can despite the challenges.

“There appears to be quite a profound awakening of the desirability for electric vehicles and it's caught us a little bit off guard,” Kirkhorn said. “And we are putting an extreme effort to build as many cars as we possibly can.”

Tesla delivered 241,300 vehicles globally in the July to September quarter, up 73% from a year earlier, beating estimates of 229,242 vehicles. Legacy automakers General Motors GM and Ford Motor Co F reported lower deliveries for the same period and attributed the lower inventories at the dealerships to semiconductor shortages.

Price Action: Tesla shares jumped to close 12.66% higher at $1,024.86 a share on Monday.

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Photo: Courtesy of Nvidia Corp. via Flickr