Musk says Tesla’s factories in Berlin and Texas are ‘gigantic money furnaces’

“The past two years have been an absolutely nightmare of supply chain disruptions, one thing after another, and we are not out of it yet,” Tesla CEO Elon Musk said.

Patrick T. Fallon | Reuters

Tesla’s newest car factories in Texas and Berlin are losing “billions of dollars right now” as supply chain disruptions hamper the electric vehicle giant’s ability to ramp up production, chief executive Elon Musk said in an interview published Wednesday.

“Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It should be like a giant roaring sound which is the sound of money on fire,” Musk said in the interview with Tesla Owners Silicon Valley, which was recorded on May 30.

“Berlin and Austin are losing billions of dollars right now because there’s a ton of expense and hardly any output. Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concerns. Everything else is a very small thing basically.”

Musk said that the Texas factory is “losing insane money” at the moment because of troubles ramping up production of cars with the so-called 4680 battery, Tesla’s latest technology. Meanwhile, the tools to make cars for the traditional 2170 batteries are “stuck in a port in China.”

“Just been trying to keep the factories operating the last couple years has been a very difficult thing, like supply chain interruptions have been severe, like extremely severe,” Musk said.

“The past two years have been an absolutely nightmare of supply chain disruptions, one thing after another, and we are not out of it yet.”

In China, a resurgence of Covid in recent weeks led to lockdowns in major cities such as Shanghai, where Tesla’s plant in the country is. Tesla plans to suspend most of the production at that factory in the first two weeks of July to carry out upgrades, Reuters reported on Wednesday.

Since the interview, Musk has announced plans to reduce Tesla’s salaried workforce by 10% in the next three months. But the company plans to increase the number of hourly employees. Tesla’s layoffs would affect around 3.5% of its overall workforce, Musk said this week.

Despite the supply chain issues, Tesla is still aiming to produce 1.5 million cars this year, Musk said in April, though he cautioned that customers face long wait times for their vehicles.

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