Tesla CEO Elon Musk said his electric-car factories are “losing billions of dollars” as global supply-chain disruptions and challenges in battery manufacturing constrain the company’s ability to scale up production.
New factories in Berlin and Austin — where Tesla moved its headquarters in December — “are gigantic money furnaces right now,” Musk told members of a club of Silicon Valley Tesla owners in Austin on May 30, according to a video of the interview published Wednesday.
“There should be like a giant roaring sound, which is the sound of money on fire,” he added.
Both factories opened earlier this year to much fanfare. At the launch of the Gigafactory in Austin in April — where Tesla produces its Model Y and plans to produce the Cybertruck, a futuristic electric pickup truck whose design Musk said had just been finalized — Musk heralded “a new phase of Tesla’s future.”
But those factories are producing a “puny” number of vehicles due to shortages of batteries and global supply-chain bottlenecks, with crucial parts stuck in ports in China, Musk said. “It has required all of our attention just to keep the factories going” in the face of “severe” disruptions, he told the Tesla fans in Austin.
“This factory is losing insane money right now,” Musk said from Texas’s capital, shaking his head as he looked through glass windows at the factory floor. “We should be outputting a lot more cars from this factory, versus a very puny amount of cars.”
Musk cited several challenges. He said the tools required to manufacture cars using 2170 battery cells were “stuck in port in China, with no one to actually move it,” while the Tesla factory in Shanghai was subject to periodic shutdowns due to local covid-19 restrictions. And he said Tesla was finding it challenging to produce more structural battery packs and associated 4680 batteries.
Musk said these issues would “get fixed real fast, but it requires a lot of attention.” He said the Tesla factory in Berlin, which opened in March, faced similar obstacles but noted that it is “in a slightly better position” because it is focused on the 2170 battery cells.
Tesla was also affected by a global shortage of semiconductor chips last year and China’s coronavirus-induced shutdown, Musk said. “I’m not sure everyone knows just how serious the covid shutdowns were in China — and it’s not done yet,” he said. He had previously said the soaring price of battery minerals was also an issue.
Musk told Tesla employees in June, after the interview was taped, that 10 percent of the company’s salaried workforce would be laid off as he expressed concerns about a possible future recession in the United States. He said Tuesday at the Qatar Economic Forum that the company grew its salaried workforce “a little too fast,” but that Tesla needed more hourly workers and probably would have more employees overall by next year.
Ex-Tesla employees sued the company over the layoffs, claiming it did not give them proper advance notice. Musk on Tuesday called it “a small lawsuit of minor consequence.”