In a recent interview, Elon Musk said that due to the disruption in supply from China the Tesla Gigafactories in Texas and Berlin are ‘losing billions of dollars.’
In a conversation with Tesla Owners of Silicon Valley, a club recognized by Tesla, Musk said that Berlin and Texas factories are gigantic and need a lot of money for their smooth functioning. Musk said, “There is a ton of expense and hardy any output.”
Due to the recent lockdown in China, the supply chain has been affected greatly. Tesla is among many foreign companies which depend upon products manufactured in China. Musk said that the new ‘4680’ batteries and the necessary components to make conventional ‘2170’ batteries are stuck in port in China.
Musk said that although the Berlin factory is in a little better position due to the use of conventional 2170 batteries, it is still struggling and unable to reach its production strength.
Stressing upon the need for functioning of two factories at their full capacity Musk said, “ Getting Berlin and Austin functional and getting Shanghai back in settled fully, are overwhelmingly our concerns”.
The Tesla factory in China is also going to suspend it’s production for the first two weeks in July. The company is planning to upgrade the facility to increase output. The company is planning to produce 22000 cars every week at this facility.
For the past few weeks, Tesla has been in the news for the possibility of firing the staff in the coming days. Musk confirmed the news by stating that the company is planning to cut staff by 10 percent to adjust the expenses.
While addressing the COVID-19 shutdown, Musk said that it had been a “very, very difficult” time for the company. The production was halted and the supply chain became a nightmare for the company due to the shutdown in China.
The Gigafactories in Texas and Berlin were opened earlier this year but are unable to increase production due to the supply chain disruption worldwide.
Musk said that the Texas factory is producing a ‘tiny’ number of cars in comparison to its production strength. Adding further Musk said that the company is going to fix it very soon.
The production delay is very bad news for the company. The competitors of Tesla understand very well the condition of the company and plan to capitalize on the opportunity.
On Thursday, German automaker giant BMW announced that it had begun production at its factory in Shenyang, China. BMW had invested 2.2 billion dollars in this facility.
