Tesla’s Texas, Berlin factories ‘losing billions of dollars’ | Business and economic news

Battery shortages and COVID restrictions in China have left the electric vehicle maker struggling to ramp up production, said Elon Musk.

Tesla’s new auto plants in Texas and Berlin are “losing billions of dollars” as they struggle to ramp up production due to battery shortages and port problems in China, Chief Executive Elon Musk said in an interview.

“The factories in Berlin and Austin are giant money furnaces right now. OK? It’s really like a giant roar, which is the sound of money on fire,” Musk said in an interview with Tesla owners of Silicon Valley, an official Tesla-recognized club, in Austin, Texas, on May 31.

The club split their interview with Musk into three parts, the last of which was released on Wednesday.

Musk said Tesla’s Texas plant produces a “small” number of cars because of challenges in ramping up production of its new “4680” batteries and because the tools to manufacture its conventional 2170 batteries are “stuck in port in China.” . He added: “This will all be fixed very quickly, but it requires a lot of attention.”

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

Seeking ‘not to go bankrupt’

He said the COVID-19-related shutdowns in Shanghai “were very, very difficult.” The shutdown has affected car production not just at Tesla’s Shanghai factory but also at its California factory, which uses some vehicle parts made in China, he said.

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

“The last couple of years have been an absolute nightmare of supply chain disruptions, one thing after another, and we’re not out of it yet,” Musk said.

Tesla’s biggest concern, he said, is “How do we keep factories running so we can pay people and not go bankrupt?”

Musk said earlier this month that he had a “very bad feeling” about the economy and that the company needed to cut staff by about 10% and “pause all hiring worldwide.” Earlier this week, he said a 10% cut in Tesla’s salaried staff would take place in three months.

Earlier this year, Tesla began production at plants in Berlin and Texas, both of which are critical to the top electric car maker’s growth ambitions.

Musk said he expects Tesla to start production of its delayed Cybertruck electric pickup trucks in mid-2023.

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