Tesla Inc (NASDAQ: TSLA) is facing losses that could run into billions of dollars from its new factories, Covid lockdowns, and supply chain disruptions, prompting CEO Elon Musk to point at the potential of bankruptcy in an interview with a Tesla owners group.
Tesla grappling with supply chain disruption
Musk said, “The past two years have been an absolute nightmare of supply chain interruptions, one thing after another. We’re not out of it yet. That’s overwhelmingly our concern is how do we keep the factories operating so we can pay people and not go bankrupt.”
Musk used exaggeration in other parts of the conversation, and he might have done so as he mentioned the possibility of bankruptcy. For instance, he used colorful rhetoric rather than solid financial analysis when he claimed that car manufacturers in principle “desperately want to go bankrupt.”
However, the business is nearing completion of the most challenging quarter fiscally in over two years. Additionally, Musk stated in the conversation that Tesla is losing billions as a result of the two facilities it launched in the quarter in Germany and Texas due to supply chain challenges that have resulted in “puny” output thus far.
The Berlin and Texas factories are losing billions without output
According to comments Musk made on May 31 that was released last week, both the Austin and the Berlin factories are huge money furnaces currently, but those will be fixed soon. He said that the two factories are burning billions of dollars currently with a lot of expenses and hardly any production.
One of the company’s harshest critics feels that the electric car manufacturer has more financial challenges than can be realized. GLJ Research analyst Gordon Johnson told CNN on Thursday that bankruptcy is a real risk for the company considering a lot of cash is locked in China. Gordon said they were not profitable until they got to China, and the problem is China doesn’t permit firms to repatriate profits made in the country, which is a real problem for Tesla.
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