Tesla accelerates cuts as uncertainty grows

Elon Musk pledges to ramp up production ‘as quickly as possible’ despite concern demand is waning

Elon Musk has vowed to step up cost cutting at Tesla as the electric carmaker warned of a slowing economy and rising interest rates. However, the US manufacturer also vowed to ramp up production rates despite growing investor concern that demand for its vehicles was waning. Tesla has been cutting thousands from the asking price for its vehicles in recent months. It delivered 1.31million cars last year, an increase of roughly 40 per cent.

ELON MUSK has vowed to step up cost cutting at Tesla as the electric carmaker warned of a slowing economy and rising interest rates.

Tesla said it would be “accelerating our cost reduction roadmap” amid “questions about the impact of an uncertain macroeconomic environment.” However, the US manufacturer vowed to ramp up production rates despite growing investor concern that demand for its vehicles is waning. Tesla has been cutting thousands from the asking price for its vehicles around the world in recent months.

Tesla delivered 1.31m cars last year, an increase of roughly 40pc, but short of a self-imposed target of growing vehicle deliveries by 50pc in 2022.

Despite record delivery numbers in the three months ending in December, when 405,000 Tesla cars were shipped, the sale figures fell short of Wall Street expectations. The company said it plans to grow production “as quickly as possible”, shrugging off fears of a slowdown in demand and concerns that Mr Musk has been increasingly distracted by his $44bn (£36bn) takeover of Twitter.

Tesla’s results came as new figures showed one in three cars made in Britain are now electric.

British factories made a record 234,066 battery electric and hybrid electric vehicles last year , according to figures from the Society of Motor Manufacturers and Traders. Production was up 4.5pc on a year earlier to represent 30.2pc of all car production.

The milestone came as overall production slumped to a 66-year low as the industry was hamstrung by parts shortages and factory closures.

Mike Hawes, SMMT chief executive, said: “To a certain extent, the only way is up from here. But we want to make sure that it is sustained growth because we still believe that this can be an attractive place to invest.”

Mr Hawes warned that more action was needed to ensure the success of Britain’s electric car industry in the face of large subsidies abroad. The US Inflation Reduction Act, which offers tax incentives to green companies and electric car customers, threatens to “suck up” investment. The EU has also promised incentives to attract electric vehicle makers and other green industries.

“You can’t just accept this laissez faire approach to investment, it’s not a level playing field,” Mr Hawes said.

The warning came as SMMT figures showed the number of cars rolling off UK production lines fell to the lowest level since 1956. Just 775,014 vehicles were completed in Britain last year, down 9.8pc on 2021 and 40pc below pre-pandemic production levels.

The industry was hampered by parts shortages, including a dearth of computer chips as production was slowed by lockdowns in China. Access to cable harnesses from Ukraine was also disrupted by the outbreak of war.

The closure of Honda’s plant in Swindon in 2021 dealt a further blow to production. The slump in output was ameliorated by a 16.5pc jump from Nissan production, which helped make the Qashqai the most popular car in the UK last year, according to SMMT.

Mr Hawes said: “These figures reflect just how tough 2022 was for UK car manufacturing, though we made more electric vehicles than ever before.”

This year, the industry expects to make 842,000 cars, cracking 1m vehicles in 2025, but there are big challenges on the way, said Mr Hawes.

Separately, an Australian company has emerged as an 11th hour bidder for the assets of collapsed battery maker Britishvolt. Recharge Industries confirmed it was interested in acquiring the site and saving the company.

Britishvolt plunged into administration earlier this month after failing to secure a rescue deal. More than 200 staff were made redundant.

It had been hoping to build a £3.8bn gigafactory near Blyth, in the North East, and had £100m in government funding earmarked for the plant.

David Collard, chief executive of Recharge, told Australian Financial Review: “Keeping Britishvolt viable and in the hands of friendly nations and companies is critical to the security of British and European supply chains and advanced manufacturing capabilities.

“By combining, we can put the sort of acceleration into Britishvolt that you’d expect from the best EV on the market.”