Electric cars switch out of fast lane

Today’s top stories

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Good evening.

Is the electric vehicle market starting to run flat?

Tesla shareholders are bracing for the carmaker’s worst performance in seven years when it reports quarterly numbers tomorrow as it grapples with slowing demand, a fierce price war and a growing challenge from China.

Elon Musk’s company is poised to change gear, slowing plans for its cheaper $25,000 Model 2 and prioritising self-driving “robotaxis”, raising questions over whether it will become a large-scale manufacturer or a smaller provider of autonomous technology.

Its investors already face a steadily falling share price and a contentious plan to move the company HQ from Delaware to Texas after a Delaware court voided Musk’s $56bn pay package. The company has already announced a 10 per cent cut in its global workforce.

Industry uncertainty is not confined to Tesla: its rival as the world’s top EV maker, China’s BYD has also reported sharp falls in sales. Consumers are balking at the prices of EVs compared with hybrid and petrol or diesel cars, and, as the FT editorial board argues, governments are failing to do enough to realise their ambitions of phasing out internal combustion engines by the 2030s.

The sector is also being reshaped, with US and European carmakers set to be overtaken by Asian rivals: a quarter of EVs sold in the EU this year are already expected to be made in China and stockpiles are all too visible at European ports. India too is looking to attract EV investment.

In China, intense domestic competition is accelerating this threat to international businesses. And unlike in the US, where Apple ditched its EV plans, even mobile phone companies are getting involved. A rare bright spot for European manufacturers comes from Volkswagen, which has successfully increased sales in China to compensate for the slowdown at home.

Manufacturers also have to contend with several uncertainties thrown up by arguments about trade tariffs and subsidies between the west and China. Several carmakers have slowed down EV plans to focus on hybrid models while they still can.

The dilemma for western EV manufacturers is how fast to increase production given the sales slowdown and the threat from China. One response, advocated by Renault chief Luca de Meo, is for the EU to adopt an Airbus-like approach to production, with more industrial co-operation and public investment.

The big worry for western carmakers, says motor industry correspondent Peter Campbell, is: what if the EV slowdown is not a blip?

As one senior executive told him: “If the Chinese sell an EV that is just as good as a western car, but cheaper, that is one thing. But if they sell a better car that also undercuts the west, it’s impossible to catch up.”

Join leaders from Peugeot, Nissan, BYD, Jaguar Land Rover and others at the FT Future of the Car summit in London from May 7-9. Newsletter subscribers get a 10 per cent discount off an in-person pass with the code FTS10. Register here.

Need to know: UK and European economy

UK Prime Minister Rishi Sunak admitted his plan to transport undocumented migrants to Rwanda would be delayed until the summer.

The Financial Conduct Authority, the UK’s top financial regulator, faces a backlash from ministers and City bosses over its plan to “name and shame” companies under investigation more frequently and at a much earlier stage. Critics fear it will drive businesses out of the UK.

Ireland is facing serious potato shortages as heavy rains delay the planting of its biggest vegetable crop and as Brexit continues to complicate the supply of seeds. The country consumes 94kg of potatoes per head annually, almost triple the global average.

Need to know: global economy

Global military spending rose almost 7 per cent to hit $2.4tn last year, the steepest annual increase in 15 years. Russia’s war in Ukraine was the main driver in Europe but expenditure also increased in other regions.

Are investors too complacent on the wider risks from conflict in the Middle East? Mohamed El-Erian compares markets to a frog in boiling water.

Singapore is on a mission to reassure international banks that the financial hub can remain stable and neutral at a time of rising tension between China and the west.

Is South Korea’s economic miracle over after decades of growth? A new Big Read discusses what’s next as the country tries to reduce its dependence on manufacturing.

Indonesia’s sovereign wealth fund is aiming to focus on the switch to green energy as part of a $1bn spending plan. The country wants to become a hub for the energy transition with the help of its vast nickel reserves. 

Need to know: business

Troubled UK utility Thames Water promised to spend an extra £1.1bn to combat environmental issues such as sewage spills. The company, which supplies 25 per cent of England and Wales, is struggling to stay afloat after shareholders refused to put more money in.

TikTok is gearing up for a long legal fight against US legislation that threatens to ban the video streaming app in its largest market if Chinese owner ByteDance refuses to sell it.

Exxon is leading a fightback by the petrochemicals industry against UN plans to limit the production of plastics.

A Shanghai flying taxi company says China’s “low altitude” industry is edging ahead of western rivals thanks to more supportive regulators, tech breakthroughs and cut-throat competition. The total market created by electric vertical take-off and landing, or eVTOL, aircraft is forecast to be worth $1.5tn a year by 2040.

BlackRock more than tripled its spending on home security for Larry Fink last year, after the asset manager’s chair and chief executive became a target for “anti-woke” activists and conspiracy theorists.

International hotel groups are stepping up plans to expand in Europe to capitalise on the post-pandemic travel boom. Airlines and airports in Turkey are benefiting from substantial investment and a bet that international travel would recover more swiftly than rivals anticipated.

The shipping industry is turning to high-tech “wings” to speed up its path to decarbonisation. The wing, called FastRig, acts as a sail and could cut fuel consumption by up to 30 per cent.

The world of work

Has it become too hard to fire people? Columnist Camilla Cavendish hits out at employment laws, which she says are creating huge backlogs at tribunals.

Millions of US workers are caught by onerous non-compete clauses, preventing them from working for a rival or setting up a competing business for a period of time after they leave a job.

The UK’s Supreme Court found the country’s trade union law breaches workers’ rights as it fails to protect them against sanctions short of dismissal when they take strike action.

The TUC, the UK’s umbrella body for unions, called for new laws to protect workers when employers use artificial intelligence, especially for “high-risk” decisions such as hiring and firing.

What lessons can those nearing retirement give to young workers? Columnist Simon Kuper offers some advice.

Some good news

Healthy life expectancy, the number of years a person can expect to live in good health, rose globally from 61.3 years in 2010 to 62.2 in 2021, according to the latest Global Burden of Disease study in The Lancet. Despite disruption from the pandemic, the rates of early death and poor health caused by HIV/Aids and diarrhoea were cut in half and the burden caused by injuries dropped by a quarter.