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Elon Musk: Tesla Is At Risk Of Bankruptcy


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Elon Musk made statements at the end of last month

 The founder of the Tesla company for electric cars, the American billionaire, Elon Musk, announced that the new factories of the giant company in Germany and America are facing huge losses estimated at billions of dollars” due to the lack of batteries and supply disruptions in China due to the emerging Coronavirus pandemic.

 "The last two years have been a supply chain nightmare," Musk said in an interview with the Tesla Owners Group.

 He added, "We are not out of the crisis yet. What concerns us greatly is how to keep factories working so that we can pay people and not go bankrupt."

 In the interview, Musk revealed that the two Tesla plants that opened in the first quarter, in Germany and Texas, are costing the company billions of dollars in losses because supply chain problems have left their production "weak" so far.

 "All of this will be fixed really fast, but both the Berlin and Austin factories are giant cash-burning furnaces at the moment," he said in comments recorded on May 31 but not released until late Wednesday.

 And he added: "The factories in Berlin and Austin are losing billions of dollars, and there are a lot of expenses and there is hardly any output."

 "All of this will be fixed very quickly, but it takes a lot of work," he added.

 For his part, GLJ Research CEO Gordon Johnson told CNN Business on Thursday that "bankruptcy is a real risk" for the company, adding: "A lot of our money is being held in China... and because Beijing does not allow companies to return dollars made to Outside the country, Tesla has a real problem."

 Johnson cited Tesla's decision to cut about 10% of its salary employees — even as it continues to hire hourly production workers — as another sign of trouble.

 "Why do you think they are cutting employees' salaries? This is a major warning sign," he said.

 Yet nearly all other analysts expect Tesla to remain a profitable company, despite supply chain problems holding it back and most other manufacturers around the world.

 Tesla has been profitable since late 2018, after years of losses, and has posted an increase in quarterly profit compared to the previous period over the past two years.

 But it seems that this series of sequentially increasing profits is about to end, as analysts expect that adjusted profits in the second quarter will fall to 2.5 billion dollars in the second quarter, down from the 3.7 billion dollars that the company achieved in the first quarter, but nonetheless this will remain higher of adjusted income of $1.6 billion in the second quarter of 2021.

 Tesla reported a 0.1% drop in new car production in the first quarter compared to the fourth, but its year-over-year production was still up 69 percent.