June 24, 2022: -This week, Tesla’s newest car factories in Texas and Berlin are losing “billions of dollars right now” as supply chain disruptions hamper the electric vehicle giant’s capacity to ramp up production, chief executive Elon Musk said.
“Both Berlin and Austin factories are huge money furnaces right now. OK? It should be such as a giant roaring sound which is the sound of money on fire,” Musk said in the Tesla Owners Silicon Valley, recorded on May 30 and posted.
“Berlin and Austin are losing billions of dollars because there’s a ton of expense and hardly any output. We are overwhelmingly concerned about getting Berlin and Austin functional and getting Shanghai back in the saddle. Everything else is a small thing.”
Musk said the Texas factory is “losing insane money” because of troubles ramping up production of cars with the 4680 battery, Tesla’s latest technology. Therefore, the tools to make cars for the traditional 2170 batteries are “stuck in a port in China.”
“Just been trying to keep the factories which operate the previous couple years has been a tough forte, like supply chain interruptions have been severe, like extremely severe,” Musk said.
“The past two years hold been a nightmare of supply chain disruptions, one thing after one more, and we are not out of it yet.”
In China, a resurgence of Covid in the latest weeks led to lockdowns in major cities such as Shanghai, where the country is located. Reuters reported Wednesday that Tesla plans to suspend most of the production at that factory in the initial two weeks of July to carry out upgrades.
Since the interview, Musk has announced is planning to reduce Tesla’s salaried workforce by 10% in three months. But the company is planning to increase the number of hourly employees. Musk said that Tesla’s layoffs would affect around 3.5% of its workforce this week.
Despite the supply chain issues, Tesla is aiming to produce 1.5 million cars this year, Musk said, though he cautioned that customers face long wait times for their vehicles.