Tesla's new car factories near Berlin and in Texas are "losing billions of dollars" as they struggle to increase production because of a shortage of batteries and China port issues, Chief Executive Elon Musk said recently.
"Both Berlin and Austin factories are gigantic money furnaces right now. It's really like a giant roaring sound, which is the sound of money on fire," Musk said in an interview with Tesla Owners Silicon Valley, an official Tesla recognized club, in Austin, Texas, on May 31.
The club divided its interview with Musk into three parts, the last of which was released Wednesday.
Musk said Tesla has struggled to quickly increase production in Austin of Model Ys that use the company’s new 4680 cells and structurally integrated battery pack. To keep up with high demand for its cars, the company said in an April letter to shareholders that it would also make Model Ys with the older 2170 cells in Austin -- but the tooling required for that got stuck in China, Musk said.
“This is all going to get fixed real fast, 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 build it in the first place,” Musk said of the Austin factory.
Berlin is in a “slightly better position” because Tesla outfitted it to build cars with the 2170 cells, he said.
Tesla has spent the last few years prioritizing building new factories in different locations around the world to make it cheaper to distribute cars in its biggest markets. More factories also give Tesla a higher ceiling for how many cars it can build per year.
The Shanghai COVID-19 shutdowns "were very, very difficult," he said. The shutdown affected car production not only at Tesla's Shanghai factory, but also at its California plant, which uses some parts made in China.
"The past two years have been an absolute nightmare of supply chain interruptions, one thing after another, and we are not out of it yet," Musk said.
Tesla's overwhelming concern, he said, is "How do we keep the factories operating so we can pay people and not go bankrupt?"
Musk said earlier this week that a 10 percent cut in salaried staff at Tesla will happen over three months. He also said a U.S. recession was more likely than not. Tesla earlier this year started production at the factories in Berlin and Texas, both of which are critical to the growth ambitions of the top electric car maker.
Musk said he expected Tesla would start production of its Cybertruck electric pickup trucks, which has been delayed, in mid-2023.
Reuters and Bloomberg contributed to this report.
