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Musk laments costs of Berlin, Texas Tesla factories

June 23, 2022

The South African-born entrepreneur said low output and supply chain issues are making the new factories an expensive endeavor. The Berlin factory in particular has been met with union and environmental challenges.

https://p.dw.com/p/4D5yU
Tesla factory in Berlin-Brandenburg
The Berlin-Brandenburg plant is Tesla's first automobile production facility in EuropeImage: Patrick Pleul/dpa/picture alliance

Tesla CEO Elon Musk said the company's new factories in Texas and Germany are "gigantic money furnaces," according to an interview released on Wednesday

What did Musk say?

Musk told the Tesla Owners of Silicon Valley fan club in late May that the two production sites are losing the company "billions of dollars," citing high costs, low output and supply chain issues.

Both of the plants were opened earlier this year. 

"Overwhelmingly, our concern is how do we keep the factories operating so we can pay people and not go bankrupt?" the South African-born entrepreneur said.

In regards to the Texas plant, the facility is producing a "tiny" number of cars due to obstacles in bolstering the production of its new "4680" batteries. The conventional "2170" batteries could instead be used in the Texas vehicles, but the tools used to make that cell are stuck in China.

"This is all going to get fixed real fast, but it requires a lot of attention," Musk said, adding that the German factory is in a "slightly better position."

German factory mired in union, environmental challenges

The German factory, which is located in Grünheide near Berlin, has been met with union and environmental challenges since its inception.

Most recently, the German union IG Metall challenged Musk's stance that workers should return to the office and stop working from home. The union also said that Tesla is struggling to hire workers in Germany due to inadequate or unequal wages, news outlet Bloomberg reported. 

During the construction of the factory, environmental groups criticized Tesla's cutting down of trees in Grünheide, prompting legal proceedings.

In addition, Tesla's factory in Shanghai has been paralyzed amid tough zero-COVID restrictions implemented by the Chinese government. 

Musk has vowed to reduce 10% of the company's salaried workforce over the next three months, while increasing the number of hourly employees. At the beginning of 2022, the company had just under 100,000 employees.

wd/sms (Reuters, dpa)