Elon Musk claims that new Tesla factories are money furnaces that lose billions.

Elon Musk stated that Tesla Inc.'s new plants in Germany and Texas are losing "billions of dollars" as the company attempts to increase output.

The chief executive officer stated in a video interview with Tesla Owners of Silicon Valley aired on Wednesday, "Both the Berlin and Austin factories are enormous money-making furnaces right now."

The remarks, which were recorded as part of a larger discussion on May 31, provide new insight into Tesla's operations in the days preceding Musk's decision to reduce expenses by laying off people. Musk told Bloomberg News Editor-in-Chief John Micklethwait on Tuesday at the Qatar Economic Forum that the layoffs will affect around 10 percent of Tesla's salaried employees over the next three months, or about 3.5 percent of its global workforce.

Advertisement

In the May 31 interview, Musk stated that Tesla had struggled to increase Model Y SUV manufacturing in Austin using the company's new 4680 cell and structurally integrated battery pack. In an April letter to shareholders, the company stated that it would also produce Model Y SUVs with the older 2170 cells in Austin in order to meet the enormous demand for its automobiles. However, according to Musk, the necessary tooling for this production is stalled in China.

Musk said of the Austin factory, "This will all be solved very quickly, but it requires a lot of attention, and it will take more effort to get this factory to high volume production than it took to create it in the first place." He stated that Berlin is in a "somewhat better situation" because Tesla has equipped it to manufacture automobiles with 2170 cells.

Tesla has spent the previous few years prioritising the construction of new plants in various global locations in order to reduce the cost of automobile distribution in its largest markets. More factories allow Tesla to produce a greater number of vehicles per year.

Musk stated that Tesla struggled to get the Austin and Berlin factories operational while also dealing with COVID-related lockdowns at the Shanghai factory. At the time of the interview last month, Tesla was still attempting to recover from a severe decline in production caused by Chinese government limitations as well as supply-chain issues.

"The previous two years have been an absolute nightmare of supply-chain disruptions, and we're not out of the woods yet." Our first priority is maintaining factory operations so we can pay employees and avoid bankruptcy," stated Musk. The COVID shutdowns in China were, to say the least, quite challenging.

Since the interview, Tesla's output in China has more than tripled.

On Wednesday, Adam Jonas, an analyst at Morgan Stanley, decreased his price estimate for the automaker's stock from $1,300 to $1,200 per share, citing China-related interruptions as a contributing factor. He maintained Tesla's overweight rating.

Tesla shares fell less than 1% to $708.26 in New York on Wednesday.

Advertisement