Elon Musk says Tesla’s new factories in Germany and the US are facing “billions of dollars in losses” due to battery shortages and supply disruptions in China. The multi-billionaire also called the plants in Berlin and Austin, Texas, “giant money furnaces”.
The Covid-19 lockdown in China this year, including in Shanghai, where Tesla has a large factory, has made it difficult for manufacturers to operate. Mr Musk has been warning of job cuts at the firm in recent weeks.
“Both the Berlin and Austin factories are huge money furnaces right now. It’s like a giant roaring sound, the sound of money on fire,” said Mr Musk, the electric vehicle maker’s chief executive.
In an interview with Tesla Owners of Silicon Valley, the company-accredited club, he said, “Right now the plants are losing “billions of dollars. There’s a ton of expense and hardly any production.”
Mr Musk said the so-called gigafactories have struggled to increase production since they were opened earlier this year.
Tesla’s site in Austin currently produces a “tiny” number of cars, partly because some components for its batteries were “stuck” at a Chinese port “with no one to move it”, he said.
“It’s all going to recover fast, but it’s going to require a lot of attention,” Musk said.
The interview was recorded late last month, but this part of the conversation was posted only on Wednesday.
Authorities in China earlier this year closed many of their cities in response to a surge in Covid-19 infections.
Strict restrictions were imposed on the movement of people and materials, including Shanghai’s financial, manufacturing and shipping hubs.
Mr Musk said it was “very, very difficult” for Tesla to shut down Shanghai, which has reportedly halted most of its production at its ‘Gigafactory’ in the city for weeks.
According to the Reuters news agency, citing an internal memo, the site will be closed again for two weeks next month to upgrade the works.
The report said the aim is to ramp up production at the site, bringing it closer to the company’s goal of producing 22,000 cars per week. Tesla did not immediately respond to the BBC’s request for comment.
Last week, the company raised the price of its full range of cars in the US by about 5%, as the cost of raw materials, including aluminium and lithium, soared. This week, Mr Musk said Tesla plans to lay off 3.5% of its global workforce after saying he has a “super bad feeling” about the economy.
Meanwhile, German carmaker BMW on Thursday said it has formally started production at its new $2.2bn (£1.8bn) facility in the northeastern Chinese city of Shenyang. BMW said the plant, the third in China, would increase its annual output in the country from 700,000 to 830,000.