Tesla Chief Elon Musk Expresses Bankruptcy Concerns, Says Factories Losing Billions Of Dollars

The billionaire entrepreneur blamed the Covid-19-related shutdowns in Shanghai which severely hit car production not only at Tesla's Shanghai factory, but also its California plant

Earlier this week, Elon Musk said a 10 per cent cut in salaried staff at Tesla will occur over three months.

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Tesla’s Chief Elon Musk has expressed concerns about how to keep the factories operating and avoid bankruptcy in an interview with an official Tesla-recognised club. Musk in an interview published on Wednesday revealed that new car factories in Texas and Berlin are "losing billions of dollars" as they struggle to increase output because of a shortage of batteries and China port issues, according to Reuters.

"Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It's really like a giant roaring sound, which is the sound of money on fire," Musk said with Tesla Owners of Silicon Valley in Austin, Texas, on May 31. He noted that Tesla's Texas factory produces a ‘tiny; number of cars because of challenges in boosting production of its new 4,680 batteries and as tools to make its conventional 2,170 batteries are "stuck in port in China.  "This is all going to get fixed real fast, but it requires a lot of attention," he added.

Sharing the biggest concern he said, "How do we keep the factories operating so we can pay people and not go bankrupt?" The world’s billionaire entrepreneur blamed the Covid-19-related shutdowns in Shanghai which had severely hit car production not only at Tesla's Shanghai factory, but also at its California plant, which uses some vehicle parts made in China, he added.

In fact in the coming months, Tesla intends to suspend most production at its Shanghai plant to work on an upgrade of the site to boost output, according to an internal memo seen by Reuters.

"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," Musk said.

Earlier, Musk had said that he had a ‘super bad feeling’ about the economy and that the company required to cut staff by about 10 per cent besides pausing all hiring globally. Earlier this week, he said a 10 per cent cut in salaried staff at Tesla will occur over three months.