- Annabelle Liang
- Business Correspondent
9 hours ago
US billionaire Elon Musk said Tesla’s new factories in Germany and the United States are “losing billions of dollars” due to battery shortages and supply disruptions in China.
Musk described the company’s factories in Berlin and Austin, Texas, as “giant money-burning furnaces.”
The shutdowns due to the outbreak of the Corona virus in China this year, including Shanghai, where a huge factory for Tesla is located, has made it more difficult to operate for manufacturers.
In recent weeks, Musk has warned of the possibility of job cuts at the company.
“The company’s factories in Berlin and Austin are giant cash-burning furnaces right now,” said Musk, chief executive of electric car maker Tesla. “It really is like giant roars, the sounds of money burning.”
Factories “are losing billions of dollars right now. There’s a lot of expense, hardly any production,” Musk said in an interview with the Silicon Valley Tesla Owners Club, a club recognized by companies.
Musk said the so-called giant factories have been struggling to increase production since they opened earlier this year.
He noted that Tesla’s Austin site currently produces a “small” number of cars, in part because some battery components were “stuck” in a Chinese port “with no one to actually move them.”
“All of this will be fixed very quickly, but it requires a lot of attention,” he added.
This interview was recorded at the end of last month, but this part of it was not published until Wednesday.
And the authorities in China closed a number of its cities earlier this year due to the high number of infections with the Corona virus.
Strict restrictions were imposed on the movement of people and materials, including in the financial, manufacturing and shipping hub of Shanghai.
Musk said shutting down Shanghai has been “very, very difficult” for Tesla, which is reported to have halted most of its production at the city’s “mega factory” for weeks.
Reuters news agency, citing an internal memo, reported that the site will largely shut down again for two weeks next month due to modernization work.
This is aimed at boosting the site’s production, the report said, bringing it closer to meeting the company’s goal of producing 22,000 cars each week.
Tesla did not immediately respond to a BBC request for comment.
The company last week raised the price of its entire line of cars in the United States by nearly five percent, due to the rising cost of raw materials, including aluminum and lithium.
This week, Musk said that Tesla plans to lay off 3.5 percent of its global workforce, after earlier saying he had a “very bad feeling” about the economy.
Meanwhile, German carmaker BMW said on Thursday it had officially started production at its new $2.2 billion (£1.8 billion) plant in the northeastern Chinese city of Shenyang.
BMW said the plant, its third in China, will increase its annual production in the country from 700,000 to 830,000 vehicles.