Twitter Facebook LinkedIn Flipboard 0 Tesla’s CEO Elon Musk has said that the new Gigafactories that the company has set up in Berlin and Texas are losing billions of dollars. Musk had previously warned that the current quarter is “very tough” for the company. He later confirmed that the EV (electric vehicle) company would shed 10% of its salaried workforce which would impact around 3.5% of its global workforce. In an interview with Tesla Owners Silicon Valley, which was recorded late last month, Musk said, “Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It should be like a giant roaring sound which is the sound of money on fire.” Musk added, “Berlin and Austin are losing billions of dollars right now because there’s a ton of expense and hardly any output. Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concerns. Everything else is a very small thing basically.” Musk is also predicting a recession in the US and sees it as inevitable. Several brokerages including Goldman Sachs and Citigroup have also raised their odds of a US recession and the latter now sees a 50% probability of a recession. Growth stocks have especially plummeted this year amid the Federal Reserve’s rate hikes and Tesla stock has lost a third of its market cap this year. New Gigafactories are Key to Tesla’s Success Tesla built its first US Gigafactory in Freemont. It then set up the second factory in Shanghai, where it produces cars not only for the Chinese market but also for exports. Its next two Gigafactories are in Texas and Berlin. These factories are crucial for Tesla as it tries to satiate strong demand for its cars. Most analysts believe that the China Gigafactory would produce fewer cars in the second quarter due to the COVID-19 lockdowns in China. China still has a zero-COVID policy and large parts of the country were shut down in the second quarter due to the emergence of COVID-19 cases. Not only, Tesla, but Chinese EV companies like NIO and Xpeng have also witnessed a loss of production this year due to supply chain issues in China. Notably, Musk managed to extract special privileges from the Chinese government for setting up its first international plant in the country. Tesla managed to set up solo operations in China while all other foreign automakers had to set up joint ventures with Chinese companies. Also, China made some Tesla models eligible for the country’s EV subsidy, which is reserved for domestic automakers. Musk Warned of a Tough Quarter Musk previously warned of a “tough quarter” in an internal email. To be sure, Musk sends such emails quite often towards the end of the quarter in a bid to provide thrust to scale up deliveries. For the last many quarters, Tesla has been reporting record deliveries every quarter. However, in the second quarter analysts expect its deliveries at around 289,000 cars which is below the 310,048 cars in the first quarter. Barclays, which is bearish on Tesla expects the company to deliver just about 251,000 cars in the second quarter. Wall Street is quite divided on Tesla stock. On one hand, we have bulls like Cathie Wood, Gene Munster, and Adam Jonas who believe that Tesla stock is a good buy. On the other side of the spectrum are brokerages like JPMorgan and Barclays which find Tesla stock overvalued. Musk Expects Sharp Rise in Tesla Deliveries Tesla’s market cap of $733 billion is just about thrice Toyota Motors. Tesla has been growing fast though and Musk expects the company’s deliveries to rise at a CAGR of 50% over the next few years. Tesla has been able to exceed Wall Street expectations over the last two years despite the pandemic, global supply chain issues, as well as lockdowns in China. Things have been tough for other EV companies and both Lucid Motors and Rivian have lowered their delivery forecasts. Even Polestar, which is set to list this week, has also lowered its 2022 delivery guidance from 65,000 to 50,000 units. Tesla would release its second-quarter delivery report in early July which would provide markets with insights into how the company fared in the “very tough quarter.” Related posts Tesla Hikes Car Prices amid ‘Very Tough Quarter’ How to Buy Nio Stock for Beginners Best Tech Stocks to Buy in 2022 – How to Buy Tech Stocks How to Buy Lucid Motors Stock Next 10x Crypto - Lucky Block (LBLOCK) Our Rating Listed on LBank, Pancakeswap - Trending in 2022 Crypto Games Platform - luckyblock.com Donations to Charity Free Ticket to Jackpot Draws Passive Income Rewards Worldwide Competitions 10,000 NFTs Minted - nftlaunchpad.com Learn More Twitter Tweet Facebook Share Email This article was written for Business 2 Community by Mohit Oberoi.Learn how to publish your content on B2C Author: Mohit Oberoi Follow @mohitoberoi Mohit Oberoi is a freelance finance writer based in India. He completed his MBA with finance as a major and also holds a CFA charter. He has over 14 years of experience in financial markets. He has been writing extensively on global markets for the last eight years and hasView full profile ›More by this author:Li Auto Falls after Weak Earnings, Other Chinese EV Stocks Also CrashChina Cuts Rates as Slowdown Bites: Would It Support the Recovery?Is Alibaba Next as Chinese Companies Start Delisting from the US?