Elon Musk has a playbook for Tesla (TSLA.O) headed into what he believes will be a “serious” recession: cut costs on everything from parts to logistics, while keeping the pressure on competitors with discounted sticker prices.
In a conference call to discuss Tesla’s fourth-quarter results, Musk and other executives outlined plans to reshape the electric vehicle (EV) maker’s cost base after slashing prices up to 20%, a move some analysts see as the first shot in a price war.
Part of the plan is expanding production at Tesla’s newest plants in Berlin and Austin, Texas and increasing the company’s in-house production of batteries, since scale yields savings, executives said.
But Chief Financial Officer Zachary Kirkhorn said the company would also be “attacking every other area of cost and unwinding cost increases created for multiple years of COVID-related instability.”
That would mean running Tesla factories leaner with fewer materials in inventory, cutting shipping and logistics costs and negotiating lower prices for components, he said – putting Tesla’s suppliers on notice.