Tesla Inc (NASDAQ: TSLA) CEO Elon Musk said two of its recently opened manufacturing plants in Austin and Berlin are losing “billions of dollars” with “tonnes of expenses and hardly any output.”
What Happened: The billionaire entrepreneur revealed that Tesla’s immediate priority is to get Giga Berlin and Giga Texas functional, and Giga Shanghai fully back up after a month-long shutdown in China.
“Both Berlin and Austin factories are gigantic money furnaces ... losing billions of dollars right now," Musk said in a talk with Tesla Owners of Silicon Valley.
Musk said Giga Texas is losing "insane money" and elaborated on the challenges the factory is facing.
“We had challenges with the 4680 [battery] ramp, with the structural battery pack plan, and then ironically, the tooling necessary for the making the 2170 cells is stuck in China,” Musk said.
“It will take more effort to get this factory to high volume production than it took to build it in the first place."
Musk, however, said Giga Berlin is in a “slightly better position” because it is building cars with the 2170 cell packs.
See Also: Elon Musk Reacts To Prediction Of Volkswagen Overtaking Tesla By 2024
Why It Matters: Tesla opened Giga Berlin, its first big factory in Europe, on March 22, and two weeks later, opened Giga Texas. Production at the two factories has ramped up slower than expected due to supply chain disruptions in China.
The two plants are expcted to boost Tesla's annual output by 1 million cars. Giga Berlin will make the Model Y and the Model 3, and also produce its own 4680 battery cells and packs. It currently imports 2170 packs from Giga Shanghai.
Giga Texas will start making Tesla’s Cybertruck and Semi EVs next year. It currently makes the Model 3 and Model Y cars.
Price Action: Tesla closed 0.4% lower at $708.3 on Wednesday, according to data from Benzinga Pro.
See Also: Elon Musk Sees These 2 Prominent EV Makers Headed Toward Bankruptcy
