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Musk says new Tesla car factories are ‘losing billions of dollars’

Tesla’s primary concern, he stated, is “how do we keep the factories operating so we can pay people and not go bankrupt?”

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Elon Musk, the CEO of Tesla Inc. (TSLA.O), stated in an interview that the company’s new car factories in Texas and Berlin are “losing billions of dollars” as they struggle to raise production due to a battery shortage and issues with China’s ports.

Musk in an interview with Tesla Owners of Silicon Valley, an official Tesla-recognized club, on May 31 in Austin, Texas, said, “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.”

The last segment of the club’s three-part interview with Musk was made public on Wednesday.

Due to difficulties in ramping up the production of its new “4680” batteries and the equipment needed to create its traditional “2170” batteries being “stuck in port in China,” Musk said that Tesla’s Texas facility only produces a “tiny” number of cars. Furthermore, he said that “This is all going to get fixed real fast, but it requires a lot of attention.”

He said that the company’s Berlin plant is in a “slightly better position” as it began utilising standard 2170 batteries for cars made at the facility.

Tesla seeks to ‘not go bankrupt’

According to Musk, the COVID-19-related shutdowns in Shanghai were “very, very difficult.” The shutdown impacted car production not just at Tesla’s Shanghai facility, but also at its California plant, which uses some vehicle parts produced in China, he added. 

According to an internal memo seen by Reuters, Tesla intends to halt the majority of production at its Shanghai factory during the first two weeks of July in order to work on an upgrade to the facility that will increase output.

We’re still in the midst of an awful nightmare of supply chain disruptions that have occurred over the last two years, Musk said.

Tesla’s primary concern, he stated, is “how do we keep the factories operating so we can pay people and not go bankrupt?”

Earlier this month, Musk declared that the firm needs to reduce workers by approximately 10% and “pause all hiring worldwide” due to his “super bad feeling” about the state of the economy. He stated earlier this week that Tesla will reduce its paid workforce by 10% over the course of three months. 

Production at Tesla’s Texas and Berlin facilities, both of which are essential to the company’s expansion plans, began earlier this year.

In addition, Musk also anticipated that Tesla would resume the delayed production of its Cybertruck electric pickup trucks in the middle of 2023.

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