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Musk outlines Tesla’s recession playbook: claw back costs

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Musk outlines Tesla's recession playbook: claw back costs

 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.”

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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.

Among its suppliers, Tesla buys batteries from Japan s Panasonic (6752.T) and China s CATL (300750.SZ), and sources the massive presses it has used to take cost and complexity out of production from Italy s IDRA Group.

Tesla is also cutting costs by redesigning elements of battery and electric motor systems, removing features that owners are not using, based on data collected from Model 3 sedans and Model Y SUVs on the road, the company said.

Bill Russo, founder of China-based consultancy Automobility, said Tesla had already made gains on cost competitiveness by driving simplified hardware designs for its electric vehicles, taking a page from consumer electronics manufacturers.

“You can offset some of the margin hit from pricing with massive scale and simpler electronic architecture,” Russo said. “This is how they are trying to win the game.”

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Meanwhile the cost of lithium in EV batteries – the single most expensive component – will be higher in 2023 than last year, Kirkhorn said, a pressure that will hit Tesla s rivals that are still losing money on EVs harder.

“My guess is if the recession is a serious one, and I think it probably will be but I hope it isn t, that would lead to meaningful decrease in almost all of our input costs,” Musk said. “So we expect to see deflation in our input costs, which would likely then lead to, yes, better margin.”

Tesla said on Tuesday it would invest more than $3.6 billion to expand its Nevada factory complex and to increase the output of battery cells so that it could produce enough there to power 2 million vehicles annually.

Tesla forecast it would sell 1.8 million EVs this year, which would mean sales growth of about 37%. That annual number could be as high as 2 million vehicles barring an external shock, Musk said.
Shares of the company jumped 10%, with those of peers Lucid and Rivian Automotive (RIVN.O) also inching up more than 2.5%.
U.S. shares of Chinese EV makers also traded higher, with Nio Inc , Li Auto and Xpeng all up between 3.5% and 4.8% in Thursday morning trade.

Tesla made an average profit of almost $9,100 per vehicle sold in the fourth quarter, down 6% from a quarter earlier but still far more than established competitors. Tesla s third-quarter profit per car sold was more than seven times higher than Toyota Motor Corp (7203.T), for example.

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Tesla slashed prices by as much as 20% earlier this month, a move that broadened the range of its line-up that qualifies for tax credits of $7,500 per vehicle in the United States.

But analysts have focused on how well Tesla can sustain a core measure of profitability, the gross margin on auto sales, excluding credits.

Kirkhorn said Tesla expected to see that metric above 20% for 2023 with the average price of its vehicles above $47,000 even after discounts. By comparison, the average price of a new vehicle was just over $49,500 in the U.S. market in December, according to Kelley Blue Book.

Bringing costs down is also key to the next phase of Tesla s expansion, which Musk hinted the company would detail at its investor day in March: plans for an affordable EV that analysts have expected to be priced below $35,000.

“While competition in the EV space continues to heat up, Tesla s focus on electrical efficiency and investment in battery technology likely makes them tough to chase in the short-term,” said analysts at Cowen and Company.

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Tesla is also planning to roll out a revamped version of the Model 3 sedan later this year code-named “Highland” with a focus in part on reduced production cost, Reuters has reported.

The company s average cost per vehicle, including all categories of its spending, was almost $44,000 in the fourth quarter.
“Price really matters. I think there s just a vast number of 

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Plea seeking restoration of ‘X’ adjourned till April 2

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Plea seeking restoration of 'X' adjourned till April 2

 Lahore High Court has adjourned the hearing of miscellaneous application seeking restoration of X (formerly Twitter) till April 21

LHC’s Justice Asim Hafeez heard the petition of Advocate Huzaifa Naeem filed for restoration of social media app X.

During the hearing Justice Asim Hafeez inquired about the petition and the petitioner stated that Pakistan Telecommunication Authority (PTA) has made impossible for public to access the micro-blogging site X.

The court suggested a solution referring to a minister who has suggested to access the platform with VPN.

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The petitioner stressed for a long-term effective solution, replied that “if police say to avoid a certain route as dacoit rule there, it is not a solution.”

The petition requested to court to declare the X outage as illegal and direct opposition to ensure the public access of X. Court has adjourned the petition for hearing till April 2.

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Samsung Galaxy to launch AI features in other devices as well on March 28

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Samsung Galaxy to launch AI features in other devices as well on March 28

Samsung Galaxy AI features will be introduced into other devices as well after on the acclaimed Galaxy S24 series.

Starting March 28, One UI 6.1 will begin rolling out across the Galaxy S23 series, S23 FE, Z Fold5, Z Flip55, and Galaxy Tab S9 Ultra, Tab S9+ and Tab S9 WiFi versions beginning this week.

In the US, Samsung Galaxy S24 users are embracing several innovative features that have revolutionized their smartphone experience.

One standout feature is Circle to Search with Google, which has become immensely popular among users. This feature allows users to search for information quickly by simply circling items on their screens, eliminating the need to switch between apps.

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Live Translate has been a game-changer for users, facilitating seamless communication by providing real-time voice and live caption translations during phone calls. This feature helps users overcome language barriers, ensuring smooth and effective communication.

Samsung’s Generative Edit tool has also garnered significant attention, offering users powerful AI-driven photo editing capabilities. This tool allows users to easily adjust and enhance their favorite pictures by resizing or filling in backgrounds after removing unwanted objects from the frame.

Another highly utilized feature is Chat Assist, integrated into the Samsung Keyboard. This feature provides users with translation, writing style suggestions, and spelling and grammar corrections, enhancing their communication experience across various apps.

These innovative AI features are enhancing the functionality and usability of Samsung Galaxy S24 smartphones, providing users with convenient and efficient ways to interact with their devices and communicate with others. 

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Amazon loses court fight to suspend EU tech rules’ ad clause

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Amazon loses court fight to suspend EU tech rules' ad clause

Amazon (AMZN.O) on Wednesday lost its fight to suspend a requirement regarding its online advertising under EU tech rules after Europe’s top court backed EU regulators, saying EU interests outweigh the U.S. online retailer’s material interests.

Under the Digital Services Act (DSA) which kicked in last year, Amazon was designated as a very large online platform subject to tough rules to tackle illegal and harmful content on its platform.

The company subsequently challenged a DSA requirement to make publicly available a repository containing detailed information on its online advertising and also asked for an interim measure until the court rules on the case.

A lower tribunal in September agreed to its request for an interim measure to suspend the contested obligation, which prompted the European Commission to turn to Europe’s top court.

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The Luxembourg-based Court of Justice of the European Union (CJEU) set aside the suspension order and dismissed Aamzon’s application for an interim measure.

The judge said that Amazon’s argument that the obligation unlawfully limits its fundamental rights to respect for private life and the freedom to conduct a business was not irrelevant.

He also said that without a suspension, it was likely that Amazon would suffer serious and irreparable harm before any judgment annulling the Commission’s decision.

However, he said a suspension could have a detrimental impact on the objectives of the DSA.

“Suspension would lead to a delay, potentially for several years, in the full achievement of the objectives of the Regulation on a Single Market for Digital Services and therefore potentially allow an online environment threatening fundamental rights to persist or develop,” the judge said.

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“The interests defended by the EU legislature prevail, in the present case, over Amazon’s material interests, with the result that the balancing of interests weighs in favour of rejecting the request for suspension.”

Amazon said: “We are disappointed with this decision, and maintain that Amazon doesn’t fit the description of a ‘Very Large Online Platform’ (VLOP) under the DSA, and should not be designated as such.”

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