New Tesla factories “losing billions” Musk says

Tesla’s new auto plants in Texas and Berlin are “losing billions of dollars” as they struggle to increase production due to battery shortages and problems with the Chinese port, the CEO said in an interview.

“Both factories in Berlin and Austin are huge money kilns at the moment. Okay? It’s really like a giant roar, the sound of money on fire,” Musk said May 31 in an interview with Tesla Owners of Silicon Valley, an official Tesla-approved club, in Austin, Texas.

Reuters said the club has divided the interview with Musk into three parts, the last of which was released Wednesday.

Musk reportedly said Tesla’s Texas plant produces a “small” number of cars because of the challenges in boosting production of its new 4680 batteries and because the tools to make its conventional 2170 batteries are stuck in the port of China. “This is all getting resolved very quickly, but it requires a lot of attention,” he said.

He said the Berlin factory was in a “slightly better position” because it started using the traditional 2170 batteries for cars built there.

Also, according to Reuters, Musk’s COVID-19-related shutdowns in Shanghai were “very, very difficult”. The shutdown impacted not only auto production at Tesla’s Shanghai plant, but also its California plant, which uses some auto parts made in China, he said.

Tesla plans to suspend most production at its Shanghai plant in the first two weeks of July to work on an upgrade of the site to increase output, according to an internal memo seen by Reuters.

“The past two years have been an absolute nightmare of supply chain disruptions, one after the other, and we’re still not over it,” Musk said.

Tesla’s overwhelming concern, he reportedly said, is, “How do we keep the factories running so we can pay people and not go out of business?”

Reuters noted that Musk had said early this month that he had a “super bad feeling” about the economy and that the company needed to cut its workforce by about 10% and “stop all hiring worldwide”. Earlier this week, he said a 10% cut in pay at Tesla would take place in three months.

Musk said he expected Tesla to begin production of its Cybertruck electric pickup trucks by mid-2023, according to Reuters.

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