Elon Musk says the public realizes it is 'foolish' to buy a gasoline car because its value will drop while the world turns to electric vehicles

• Elon Musk said it is "foolish" to buy a gasoline car because its residual value is low.
• He said in Tesla's earnings call the people of Earth have chosen to move away from gasoline cars.

Tesla CEO Elon Musk claimed the majority of people now think it is unwise to purchase a car that runs on gasoline because its value will most likely drop as the company reported record revenues.

The billionaire was responding to an analyst's question during Tesla's earnings call on October 19 about how the electric car manufacturer would adjust if the US enters a recession.

"I think the public at large realizes that the world's moving towards electric vehicles and that it's foolish to actually buy a new gasoline car at this point because the residual value of that gasoline car is going to be very low," Musk said, according to a transcript of the earnings call from Insider's Tim Levin.

Tesla is in "a very good spot," Musk said.

"I wouldn't say it's recession-proof but it's recession-resilient," he said, adding that it's because people have "made the decision in large part to move away from gasoline cars."

While EV sales are growing sharply they still account for just 5.34% of the total auto market in 2022, according to data from Kelley Blue Book's Q3 2022 sales report. More than 193,000 EVs were sold in the third quarter this year, compared to nearly 115,000 in the same period last year, per the report.

Tesla reported record revenues of $21.45 billion in the third quarter of this year, but it fell short of what analysts were expecting: around $21.96 billion, according to IBES data from Refinitiv. The company also made a net income of nearly $3.3 billion.

"We are going pedal to the metal come rain or shine," Musk said in the earnings call. "We are not reducing our production in any meaningful way."

Tesla, like many other car manufacturers, has this year been hit by supply chain shortages and backlogs, as well as the rising cost of materials. In the past two quarters, the company said supply chain issues have been exacerbated by its Shanghai factory shutting down due to COVID and Russia's invasion of Ukraine.

Out of the two billion vehicles on the road globally, around three and a half million of them are Teslas, Musk said. The company has a long way to go before reaching its goal of 1% of the global fleet being Teslas, he added.