Elon Musk calls Tesla’s new car factories ‘gigantic money furnaces’

The newly opened factories in Germany and Texas are losing billions of dollars, according to Tesla’s boss Elon Musk.

Tesla’s factories in Germany and Texas, which opened earlier this year, are ‘gigantic money furnaces’, Elon Musk declares. Picture: Suzanne Cordeiro/AFP

Tesla’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 said in a recent interview.

The company’s plants in Germany and MTexas, 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?” Mr Musk said in the interview. He added that he expected Tesla to resolve these problems quickly.

In the weeks since the interview was recorded, Tesla has begun lay-offs that Mr Musk indicated could touch 10 per cent of the company’s salaried workforce.

Mr Musk didn’t immediately respond to a request for comment. Tesla’s stock closed down less than 1 per cent on Wednesday, but has tumbled by around a third in 2022.

Car making is a notoriously cash-hungry business, and investors for years worried that Tesla’s war chest wouldn’t be sufficient. Such concerns had eased, however, as the company paid down debt, raised money and reported a string of quarterly profits that helped transform it into the most valuable automaker in the world. As of the first quarter, Tesla was sitting on roughly $US17.5bn in cash.

Fortunes can change quickly, however, and Tesla has faced several setbacks in recent months, including a weekslong shutdown of its plant in Shanghai, which had been its largest by volume.

Sarah Donaldson contributed to this article.

The Wall Street Journal