Tesla CEO admits factories are money pits

Musk admits Tesla factories burn billions

Is Tesla's house of cards collapsing? This question haunts every discussion about the company since its own CEO admitted what no investment brochure wants to read: the Austin and Berlin plants are, in his words, "gigantic money burning machines" losing billions. He said this during a chat with brand owners, adding the detail that seals the deal: the tool needed to manufacture 2170 cells is stuck in China. It is not a bearish analyst. It is the owner.

The admission comes with production at rock bottom and a string of promises aging poorly. The electric truck, robotaxis, Hyperloop: the catalog of projects that were supposed to change everything but have changed nothing. The stock holds above $700, and that is where the real battle begins.

Battery issues and manufacturing costs

The bottleneck is not the motor. Any major manufacturer can design a state-of-the-art motor and inverter; competitive advantage is decided in the cells. All brands have more orders for electric vehicles than they can fulfill, and all admit being limited by battery supply. The question is no longer who has the best battery, but who manufactures it cheaper and in higher volume.

Tesla got there first. But the advantage shrinks each quarter, and the start of 4680 cell production and the structural battery plan have stalled. Meanwhile, the Shanghai plant — the company's largest — was closed for several weeks due to lockdowns, and this shows in deliveries: **310,048 vehicles in Q1 versus 254,695 in Q2**, an 18% drop, below the 295,000 analysts expected. The plant does not only supply China; it also exports to Europe and Japan.

Autopilot layoffs and accident rates above average

The autonomous driving division is not having its best moment either. Around **200 jobs** have been cut, and the San Mateo office, the hub of Autopilot development, is closing. The timing stings: investigation data showed Tesla's accident rate per 1,000 vehicles was "substantially higher" than other manufacturers. Internal purges are not new in founder-led companies, but the autonomous driving narrative is starting to have more holes than arguments.

House of cards and stock price

With the stock above $700, retail investors face the old dilemma. If you believe the CEO, you have a dignified exit and avoid greater harm. If you don't, you average down and wait. The problem is that the value has long been sustained by expectations rather than accounts: the same pattern as in the crypto world, where narrative moves the price until it stops doing so.

Some argue that the x10 times are over and it is better to look at the S&P 500 than the share price of a manufacturer with production problems. Opposing them is the faith of the young shareholder who saves part of their salary to buy three shares a month. The average age of forum investors does not help objectivity.

Entrepreneurship in the US and the art of selling smoke

The cultural background weighs heavily. Across the Atlantic, failure is well-regarded and starting a business is the childhood dream of any cartoon series. Here, making money triggers immediate suspicion. The comparison with Amancio Ortega or the inventor of Silestone illustrates the double standard: global eminence abroad, anonymous at home.

The other side is the entrepreneur who sells expectations and then fails to deliver. The parallel with developers who promised Wi-Fi at bus stops and ended up with liquidated companies is not gratuitous. The difference is scale: here, half the world's investment funds are playing with their money.

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In the end, the question is not whether Tesla goes bankrupt, but how much of its valuation is technology and how much is faith. And faith, like furnaces, also consumes.