Tesla, Elon Musk’s electric vehicle company, had opened two new car factories in Texas and Berlin this year as part of its mission to rapidly build capacity for production, to make it cheaper to distribute cars in its biggest markets. Two months after opening the Gigafactory in Texas, Tesla CEO Elon Musk said in an interview that both were “gigantic money furnaces” that were losing billions of dollars.
The interview was with Tesla Owners of Silicon Valley, an official Tesla-recognised club in Austin, Texas. “Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It’s really like a giant roaring sound, which is the sound of money on fire,” Musk said, adding that the Texas factory produced a “tiny” number of cars because of obstacles faced in ramping up the production of its new 4680 batteries.
When it announced in a letter to its shareholders that it would also make Model Y SUVs with the older 2170 cells in Austin, Texas, it ran into more challenges as the tools required for the process got stuck in China.
Tesla’s shares dropped by 0.4% to trade at $708.26 on Wednesday.
While the Berlin factory has been incurring losses as well, it is in a “slightly better position” since it started production using the traditional 2170 batteries for cars built there. Musk said that the issues would be fixed “real fast,” but it required a lot of attention.
Times have been tough for Tesla, and not only because of Musk’s increased focus on Twitter in recent times (though it seems that we might be seeing the end of the journey soon). While the company has struggled to increase production, it has faced further challenges in the form of a shortage of batteries, disruptions in the supply chain, and China port issues.
“The past two years have been an absolute nightmare of supply chain interruptions, one thing after another, and we’re not out of it yet,” Musk said.
Going forward, the company aims to halt most of the production at its Shanghai factory, which has faced challenges of its own due to COVID-related lockdowns, in the first two weeks of next month in order to work on an upgrade of the site to boost output.
The interview sheds some light on Musk’s recent decision to lay off several of Tesla employees. Musk had earlier said that Tesla would be cutting down 3.5% of its global workforce as it laid off 10% of its salaried staff over the next three months.
This had prompted several disgruntled and affected employees to file a lawsuit against the electric car company, saying that Tesla had broken the law by not providing a notice of 60 days.
