Musk Says Berlin and Austin Plants Are "Gigantic Money Furnaces"
Tesla CEO Elon Musk says the company’s newest car factories in Austin and Berlin are “losing billions of dollars” at the moment as they require massive expenses to operate but have hardly any output due to a shortage of batteries and China port issues.
“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.”
In an interview with Tesla Owners Silicon Valley, an official Tesla recognized club, the executive said the Texas factory produces a “tiny” number of vehicles because of challenges in ramping production of the company’s new 4680 batteries and as tools to make its conventional 2170 batteries are “stuck in port in China.“
Elon Musk added that the Shanghai COVID-19 lockdowns in China “were very, very difficult.” The shutdown affected car production not only at Tesla’s Shanghai plant, but also at its California factory, which uses some vehicle parts made in China.
Gallery: Tesla Giga Texas (Tesla Gigafactory 5)
The executive said it will take more effort to bring the Austin and Berlin plants to high-volume production than it took to build them in the first place. That said, the Berlin plant is in a slightly better position than Austin because it started off with the 2170 batteries and did not have the 4680 and structural pack ramp issues.
In light of these challenges, Musk noted that Tesla’s overwhelming concern at the moment is to find ways to keep the factories operating so it can pay people and not go bankrupt.
“The past two years have been an absolute nightmare of supply chain interruptions, one thing after another, and we’re not out of it yet.”
Tesla’s new factories in Berlin and Austin, which started production earlier this year, are critical to the growth ambitions of the electric car maker. During the same interview, Musk said he expected production of the Cybertruck to start in mid-2023 at the Texas plant, after the electric pickup was delayed several times.
Earlier this week, the billionaire entrepreneur said that a 10 percent cut in salaried staff at Tesla will happen over three months. He also said that a US recession was more likely than not.
You can watch Elon Musk’s interview in full in the video at the top of this page. The discussion was recorded on May 31 and was divided by Tesla Owners Silicon Valley into three parts, the last of which was released June 22.
Gallery: Tesla Giga Berlin (Tesla Gigafactory 4)
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