Resultantly, Musk calls his plants in Berlin and Austin gigantic money furnaces.
Tesla Factories Are Facing Billions of Dollars in Loss. Yes, you heard it right. While visiting the construction site in Germany, Tesla’s CEO stated that they are losing billions of dollars mostly due to the battery shortages and disruptions in the supply chain in China. He recently visited Tesla’s Gigafactory in Germany. The SpaceX founder called his plants in Berlin and Austin gigantic money furnaces.
“Both Berlin and Austin factories are gigantic money furnaces right now. It’s really like a giant roaring sound, which is the sound of money on fire,” said Mr. Musk, who is the electric vehicle maker’s chief executive.
Tesla in China
Tesla relies on China for its battery requirement and has a huge Factory in China that was badly hit by the restrictions put down due to the Covid-19 lockdowns. These conditions have made it increasingly difficult for such a huge factory to operate successfully. This has forced Musk to announce a probable job cuts warning at the firm.
Musk further added that his most major plants are losing money right now and there are a ton of expenses piling up with hardly any output. The new Twitter CEO also hinted at a potential spree of lay-offs of Twitter employees. The surprising news was that he also threatened to walk away from the deal with Twitter during the address at the Silicon Valley club.
Musk said that these gigantic factories, her terms “gigafactories” have been struggling to add up to the production since they were set up earlier this year. Tesla’s current site in Austin, Texas at the time is only producing a small number of cars mainly because the battery components were stuck at a Chinese port. Musk remains hopeful in saying that all this chaos can be fixed in a fast time requiring a lot of his attention.
This entire interview was recorded last month but this part was released not until this Wednesday.
Shanghai Lockdown and Tesla
Tight restrictions placed by the Chinese government restricted not only ports and industries but the lockdown also restricted the movement of people which has had its effects on every industry. Musk further admitted that the lockdown in Shanghai was very, very tough for the company which reportedly paused most of its production for weeks. The gigafactory will further close for two weeks for upgrading works according to an internal memo.
The upgrades are aimed at boosting the production output of the site which can bring it closer to the company’s goal of having an output of 22,000 cars each week.
Only last week, the company raised its car prices for the entire range in the US by almost 5% due to an increase in the prices of aluminum and lithium rose. Musk also said that the company plans to shed 3.5% of its workforce across the world. The CEO said it made him feel super bad about it but the economy is not on their side at the moment.
Check out how Elon Musk wants Twitter to be more Profitable.
Meanwhile BMW, the German carmaker reported on Thursday that it has begun production at its new production facility in the North-Eastern Chinese city of Shenyang which cost $2.2billion to construct. This is BMW’s third plant in China that will help in increasing its production from 700,000 to 830,000.