Elon Musk said new Tesla plants in Germany and Texas are losing “billions of dollars” as the electric vehicle maker tries to increase production.
“Both Berlin and Austin factories are gigantic money furnaces right now,” Mr Musk said in a video interview with Tesla Owners of Silicon Valley that was posted online on Wednesday.
The comments, part of a broader discussion filmed on May 31, offer new insight into Tesla’s operations in the days leading up to Mr Musk’s decision to cut costs by laying off employees. The reductions will affect about 10 per cent of Tesla’s salaried workers over the next three months, or about 3.5 per cent of its global workforce, Mr Musk told Bloomberg at the Qatar Economic Forum on Tuesday.
The billionaire also said in the 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 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, Mr Musk said.
“This is all going to get fixed real fast, but it requires a lot of attention, and it will take more effort to get this factory to high volume production than it took to build it in the first place,” Mr Musk said of the Austin factory. Berlin is in a “slightly better position” because Tesla outfitted it to build cars with the 2170 cells, he said.
Tesla has spent the past few years prioritising the building of new factories in 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 difficulties in getting the Austin and Berlin factories up and running piled up as the car maker was also dealing with Covid-related lockdowns at its Shanghai plant, Mr Musk said.
At the time of the interview, Tesla was still trying to recover from a dramatic drop in production caused by the Chinese government’s restrictions, as well as persistent supply-chain headaches.
“The past two years have been an absolute nightmare of supply-chain interruptions, one thing after another, and we’re not out of it yet. Overwhelmingly, our concern is how do we keep the factories operating so we can pay people and not go bankrupt,” Mr Musk said. “The Covid shutdowns in China were very, very difficult, to say the least.”
Since the interview, Tesla has more than tripled production at its plant in China.
Morgan Stanley analyst Adam Jonas on Wednesday cited the China disruptions in part as he lowered his price target on Tesla to $1,200 a share from $1,300. He maintained his overweight rating on the car maker.
Tesla’s shares closed down less than 1 per cent to $708.26 on Wednesday in New York.
KILLING OF QASSEM SULEIMANI
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Tentative schedule of 2017/18 Ashes series
1st Test November 23-27, The Gabba, Brisbane
2nd Test December 2-6, Adelaide Oval, Adelaide
3rd Test Dcember 14-18, Waca, Perth
4th Test December 26-30, Melbourne Cricket Ground, Melbourne
5th Test January 4-8, Sydney Cricket Ground, Sydney
Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
Checks continue
A High Court judge issued an interim order on Friday suspending a decision by Agriculture Minister Edwin Poots to direct a stop to Brexit agri-food checks at Northern Ireland ports.
Mr Justice Colton said he was making the temporary direction until a judicial review of the minister's unilateral action this week to order a halt to port checks that are required under the Northern Ireland Protocol.
Civil servants have yet to implement the instruction, pending legal clarity on their obligations, and checks are continuing.
UAE and Russia in numbers
UAE-Russia ties stretch back 48 years
Trade between the UAE and Russia reached Dh12.5 bn in 2018
More than 3,000 Russian companies are registered in the UAE
Around 40,000 Russians live in the UAE
The number of Russian tourists travelling to the UAE will increase to 12 percent to reach 1.6 million in 2023
The alternatives
• Founded in 2014, Telr is a payment aggregator and gateway with an office in Silicon Oasis. It’s e-commerce entry plan costs Dh349 monthly (plus VAT). QR codes direct customers to an online payment page and merchants can generate payments through messaging apps.
• Business Bay’s Pallapay claims 40,000-plus active merchants who can invoice customers and receive payment by card. Fees range from 1.99 per cent plus Dh1 per transaction depending on payment method and location, such as online or via UAE mobile.
• Tap started in May 2013 in Kuwait, allowing Middle East businesses to bill, accept, receive and make payments online “easier, faster and smoother” via goSell and goCollect. It supports more than 10,000 merchants. Monthly fees range from US$65-100, plus card charges of 2.75-3.75 per cent and Dh1.2 per sale.
• 2checkout’s “all-in-one payment gateway and merchant account” accepts payments in 200-plus markets for 2.4-3.9 per cent, plus a Dh1.2-Dh1.8 currency conversion charge. The US provider processes online shop and mobile transactions and has 17,000-plus active digital commerce users.
• PayPal is probably the best-known online goods payment method - usually used for eBay purchases - but can be used to receive funds, providing everyone’s signed up. Costs from 2.9 per cent plus Dh1.2 per transaction.
BMW M5 specs
Engine: 4.4-litre twin-turbo V-8 petrol enging with additional electric motor
Power: 727hp
Torque: 1,000Nm
Transmission: 8-speed auto
Fuel consumption: 10.6L/100km
On sale: Now
Price: From Dh650,000
The specs
Engine: 2.0-litre 4-cyl turbo
Power: 201hp at 5,200rpm
Torque: 320Nm at 1,750-4,000rpm
Transmission: 6-speed auto
Fuel consumption: 8.7L/100km
Price: Dh133,900
On sale: now
Read more about the coronavirus
Key features of new policy
Pupils to learn coding and other vocational skills from Grade 6
Exams to test critical thinking and application of knowledge
A new National Assessment Centre, PARAKH (Performance, Assessment, Review and Analysis for Holistic Development) will form the standard for schools
Schools to implement online system to encouraging transparency and accountability
