Image Source: Bloomberg
New Tesla factories in Germany and the US, according to Elon Musk, are “losing billions of dollars” due to battery shortages and supply interruptions in China. Additionally, the multi-billionaire referred to the facilities in Austin, Texas, and Berlin, Texas, as “gigantic money furnaces.”
It has been more challenging for manufacturers to operate this year due to Covid-19 lockdowns throughout China, notably in Shanghai, where Tesla has sizable manufacturing. In addition, Mr. Musk has recently issued warnings about job cutbacks at the company.
“Right now, the cities of Austin and Berlin are both massive money furnaces. So it sounds like a huge roaring noise, like burning money, “added Mr. Musk, who serves as the company’s chief executive.
New Tesla factories are “presently losing billions of dollars. This is because there are many costs and very few results. “In an interview with the Tesla Owners of Silicon Valley, a group that has received business recognition, he noted.
Since they were inaugurated earlier this year, Mr. Musk claimed that the so-called gigafactories have had difficulty increasing production.
Due in part to some battery-related parts being “trapped” at a Chinese port “with no one to transfer it,” he claimed, Tesla’s Austin facility only produces a “small” number of cars at the moment.
The problem will be resolved quickly, but it needs a lot of attention, Mr. Musk continued.
Although the interview was captured at the end of last month, this particular segment wasn’t posted until this past Wednesday.
An increase in Covid-19 infections prompted Chinese authorities to lock down several cities earlier this year. There were stringent limitations placed on the movement of people and goods, including in Shanghai, a manufacturing, finance, and shipping center.
Tesla apparently stopped most of its manufacturing at its ‘gigafactory’ in the city for weeks due to the shutdown of Shanghai, which Mr. Musk described as “very, very painful” for Tesla.
According to the Reuters news agency, which quoted an internal memo, the site will once again be largely down for two weeks in January for upgrade work. This is intended to increase production at the facility and get it closer to the company’s objective of the plant manufacturing 22,000 cars per week, according to the report.
As the price of raw materials such as lithium and aluminum increased last week, the firm increased the price of its whole line of automobiles in the US by about 5%.
After expressing his “very awful feeling” about the economy earlier in the week, Mr. Musk announced this week that Tesla planned to reduce its global staff by 3.5 percent.
In the meantime, the German automaker BMW announced on Thursday that it had formally started production at its new $2.2 billion (£1.8 billion) factory in the city of Shenyang, China. BMW claimed that the facility, which would be it’s third in China, would expand its yearly production from 700,000 to 830,000 vehicles.