Elon Musk said electric carmaker Tesla is “losing billions of dollars” at its new factories in the US and Germany and is trying not to “go bankrupt,” while indicating that China’s supply chain disruptions are a huge part of the problem.
The Tesla chief executive said a shortage of batteries and machinery tools stuck in Chinese ports is taking a heavy toll on output and revenue, with new factories in Austin, Texas, and Germany the most affected.
Both the Berlin and Austin factories are “gigantic money furnaces right now,” he said, describing them as “like a giant roaring sound, which is the sound of money on fire.”
“How do we keep the factories operating so we can pay people and not go bankrupt?” he said. “Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concerns. Everything else is a small thing.”
Musk said Tesla’s Austin factory produces a “tiny” number of cars because of challenges in boosting production of its new “4680” batteries and as tools to make its conventional 2170 batteries are “stuck in port in China.”
“This is all going to get fixed real fast, but it requires a lot of attention,” he told the Tesla Owners of Silicon Valley, a club based in Austin, on May 31.
Berlin Situation ‘Slightly Better’
He said its Berlin factory is in a “slightly better position” because it started with using the traditional 2170 batteries for cars built there.
Elon Musk said the Covid-19-related shutdowns in Shanghai “were very, very difficult.” The closure affected car production not only at Tesla’s Shanghai factory, but also at its California plant, which uses some vehicle parts made in China.
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 boost output, according to an internal memo.
“The past two years have been an absolute nightmare of China supply chain interruptions, one thing after another, and we’re not out of it yet,” Elon Musk said.
Tesla’s overwhelming concern, he said, is “How do we keep the factories operating so we can pay people and not go bankrupt?”
Musk said he expected Tesla would start production of its Cybertruck electric pickup trucks, which has been delayed, in mid-2023.
- Reuters, with additional editing by George Russell