Tesla is currently going through a decisive period for its future and that of its employees. In front of its shareholders, Elon Musk admitted that the financial situation of the company is at its worst. After two years of supply problems, the losses are displayed in the billions for the manufacturer, which is now looking for solutions to recover.
Since the start of the pandemic, all car manufacturers, like other tech companies, have had to deal with big problems in their supply chain. For some, while it is estimated that 525 billion dollars have been spent by companies to undertake their transition to electricity, this means the obligation to rethink their project and their ambitions. But for others, for whom this transition is already made, the situation is dramatic.
“The last two years have been an absolute nightmare of supply chain disruptions”. Elon Musk didn’t mince words during his meeting with members of the Tesla Owners of Silicon Valley club. The CEO was formal: the company is currently losing billions of dollars because it cannot produce in sufficient quantities. The situation is so serious, in fact, that Elon Musk does not rule out the possibility of going bankrupt.
Tesla could soon go bankrupt
Little throwback. Unlike other startups in the industry, Tesla is profitable since 2018. Since then, its production has increased exponentially, allowing it to post record profits of $3.7 billion in the fourth quarter of 2021. But, as the second quarter of 2022 draws to a close, it’s a cold shower: profits fell to $2.5 billion.
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The sum remains substantial, of course, but that would be to forget that Tesla’s expenses have also experienced a significant jump in recent years, while sales, they, don’t take off. Results : “Our main concern is how to make the factories work so that we can pay people and not go bankrupt”, explains Elon Musk. Objective number 1: decrease spending.
The CEO has already frozen hiring around the world and plans to lay off several thousand employees in the coming months. It remains to be seen whether this will be sufficient. “They weren’t profitable before they were in China; and, given that China does not allow companies to repatriate dollars made there out of the country, Tesla has a real problem”, says analyst Gordon Johnson. At the end of 2021, Elon Musk admitted that SpaceX was also on the verge of bankruptcy.