Elon Musk Calls Tesla’s New Car Factories ‘Gigantic Money Furnaces’

Tesla Gigafactory construction progress in Austin Texas stock photo
RoschetzkyIstockPhoto / iStock.com

Tesla opened two gigafactories earlier this year in Texas and Germany, but now CEO Elon Musk is saying that they are “losing billions of dollars.”

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“Both Berlin and Austin factories are gigantic money furnaces right now,” the chief executive officer said in a multi-part video interview with Tesla Owners of Silicon Valley. The interview was filmed in May and released June 22.  

“Berlin and Austin are losing billions of dollars right now because there’s a ton of expense and hardly any output. Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concerns. Everything else is a very small thing basically,” he said in the video.

The June 22 video release comes on the heels of Musks’s clarification earlier in the week about the electric vehicle company’s planned layoffs.

As GOBankingRates previous reported, Musk, speaking at the Qatar Economic Forum on June 21, said his EV company’s workforce would be reduced by 10% over the next three months, but the overall headcount reduction would only be around 3.5% because hourly staff numbers are still expected to grow, according to Bloomberg.

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“We grew very fast on the salaried side,” Musk said at the Qatar Economic Forum, according to Bloomberg. “A year from now, I think our headcount will be higher in salaried and hourly workers, but for now the reduction will be 3% to 3.5%.”

In an internal email to Tesla execs earlier this month, Musk said he had a “super bad feeling” about the economy. At the time he wrote, “Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas. Note, this does not apply to anyone actually building cars, battery packs or installing sloe. Hourly headcount will increase.”

Supply chain issues and COVID-19-related production issues at its Shanghai factory were a few of the issues that have been taking a toll on Tesla recently. The stock price has also suffered from a broad tech sell-off, growing recessionary fears, Musk’s stock sales to fund his planned acquisition of Twitter and concerns related to revenue and earnings growth from growing competition and rising costs, Garrett Nelson, vice president and senior equity analyst at CFRA Research, wrote in a note sent to GOBankingRates.

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Tesla opened its Gigafactory Berlin on March 22 after months of delay, in a move that some analysts said at the time would remove “a major overhang on the stock over the past few months.”

Shares of Tesla are down about 33% year-to-date and were up 4.77% in pre-market trading on June 24.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.

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