Tesla CEO Ilon Musk laid out his action plan for the company’s fight against the recession, which focuses on maximizing cost reductions on everything from parts and logistics to lowering car prices, Reuters writes.

Reporting on Tesla’s fourth-quarter results, Musk also talked about another part of such a plan, namely expanding production at Tesla’s newest plants in Berlin and Austin, Texas, as well as increasing its own battery production, as scaling up allows for savings.

According to Tesla CFO Zachary Kirkhorn, the company will also be cutting all other costs caused by years of instability due to COVID-19, which will mean running Tesla plants more economically with fewer materials in stock, reducing shipping and logistics costs, and negotiating lower component prices.

For now, Tesla is buying batteries from Japan’s Panasonic (TYO:6752) (OTC:PCRFY) and China’s CATL, while the massive presses it used to use to reduce the cost and complexity of production are being bought from Italy’s IDRA Group.

Tesla is also cutting costs by redesigning battery cells and electric motor systems, removing features that owners don’t use, based on data collected on the road from Model 3 sedans and Model Y SUVs.

The company intends to offset some of the lower margins through greater scale and simpler electronic architecture, but there remains a major unresolved issue – the cost of lithium in electric vehicle batteries, the most expensive component, which will be higher than it was last year.

“I anticipate that if the recession is severe, it will lead to a significant reduction in almost all of our manufacturing costs. So we expect to see deflation in our manufacturing costs, which will probably lead to margin improvement,” Musk said.

The company said it is investing more than $3.6 billion to expand its Nevada factory complex and increase battery cell production.

Musk’s company is forecasting annual sales of 1.8 million electric vehicles, which would mean sales growth of about 37%. Tesla posted an average profit of nearly $9,100 per vehicle sold in the fourth quarter, down 6% from a quarter earlier.

Thanks to a recent 20% price cut, the company has expanded the range of its lineup, which is eligible for a tax credit of $7500 per vehicle in the United States.

But the most important thing for analysts is how well Tesla will be able to maintain its main profitability metric – gross profit from car sales excluding credits. Tesla expects that figure to exceed 20 percent in 2023, and the average price of its cars to exceed $47,000 even after rebates.

Thanks to cost cutting, Musk will soon announce plans to release a relatively affordable electric car priced below $35k.

Tesla also plans to release an updated version of the Model 3 sedan, codenamed “Highland,” with a focus on lowering production costs.