Tesla’s Two New Car Factories Are Gigantic Money Furnaces

Tesla Inc.’s two newest car factories have been losing billions of dollars as supply-chain disruptions and battery-cell manufacturing challenges limit the company’s ability to increase production, Elon Musk stated in a recent interview.

The two new company plants in Germany and Texas, which opened earlier this year, are “gigantic money furnaces,” the Tesla chief executive said in a May 30 interview with a Tesla owners’ club that was released Wednesday.

“Overwhelmingly our concern is, how do we keep the factories operating so we can pay people and not go bankrupt?” Musk said in the interview. He added that he expected Tesla to resolve these problems quickly.

Musk also said in the May 31 interview that Tesla has struggled to quickly increase production in Austin of Model Y SUVs that use the company’s new 4680 cells and structurally integrated battery pack. To keep up with the high demand for its cars, the company said in an April letter to shareholders that it would also make Model Y SUVs with the older 2170 cells in Austin — but the tooling required for that got stuck in China, Musk 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.

Tesla’s struggles in getting the Austin and Berlin factories up and running occurred as the automaker was also dealing with COVID-related lockdowns at its Shanghai plant, Musk said. At the time of last month’s interview, Tesla was still trying to recover from a dramatic drop in production brought on by the Chinese government’s restrictions, as well as persistent supply-chain headaches. Lockdowns in Shanghai hobbled the city's port—the world's largest—leading to supply chain disruption across industries.