Elon Musk Says His Tesla Plants Are ‘Gigantic Money Furnaces’

Elon Musk Says His Tesla Plants Are ‘Gigantic Money Furnaces’

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Photo: Patrick Pleul/AFP/Pool (Getty Images)

Elon Musk has an alarming metaphor for the state of Tesla’s newest factories, the National Highway Traffic Safety Administration wants black boxes to be better and Toyota’s first big EV has received a facepalm-inducing recall. All that and more in The Morning Shift for June 23, 2022.

1st Gear: Let’s Hope They Burn Clean

The past month has been somewhat tumultuous for Tesla and its CEO Elon Musk, between the layoffs and the work from home stuff and the rising prices and, apparently, the “gigantic money furnaces.” No, I’m not talking about his ill-conceived Twitter bid or Tesla Solar; this is about the EV maker’s plants in Berlin and Austin. From Reuters:

“Both Berlin and Austin factories are gigantic money furnaces right now. Okay? It’s really like a giant roaring sound, which is the sound of money on fire,” Musk said in an interview with Tesla Owners of Silicon Valley, an official Tesla-recognized club, in Austin, Texas, on May 31.

We’ve been critical of the world’s richest man in the past — how dare we — but I’ll give him this: he sure knows how to paint a picture with words. Here’s the cause behind the “giant roaring sound,” courtesy Bloomberg:

Tesla’s struggles in getting the Austin and Berlin factories up and running occurred as the automaker was also dealing with Covid-related lockdowns at its Shanghai plant, Musk said. At the time of last month’s interview, Tesla was still trying to recover from a dramatic drop in production brought on by the Chinese government’s restrictions, as well as persistent supply-chain headaches.

“The past two years have been an absolute nightmare of supply-chain interruptions, one thing after another, and we’re not out of it yet. Overwhelmingly our concern is how do we keep the factories operating so we can pay people and not go bankrupt,” Musk said. “The Covid shutdowns in China were very, very difficult, to say the least.”

Specifically, ramping up the Model Y in Austin has proven difficult, due to an inability to source new cells, forcing the company to revert back to older ones:

Musk also said in the May 31 interview that Tesla has struggled to quickly increase production in Austin of Model Y SUVs that use the company’s new 4680 cells and structurally integrated battery pack. To keep up with high demand for its cars, the company said in an April letter to shareholders that it would also make Model Y SUVs with the older 2170 cells in Austin — but the tooling required for that got stuck in China, Musk said.

“This is all going to get fixed real fast, but it requires a lot of attention, and it will take more effort to get this factory to high volume production than it took to build it in the first place,” Musk said of the Austin factory. Berlin is in a “slightly better position” because Tesla outfitted it to build cars with the 2170 cells, he said.

I’ll applaud the candidness here, because while every other manufacturer is enduring what Tesla is in their own ways, none of their executives have supplied comparably poignant metaphors to convey their hardships. It’s also worth stressing that Berlin and Austin are new factories, and new factories never ramp up immediately. Tesla will be fine, but don’t be surprised to hear about a few more company-wide blasts to “rally hard” in the coming weeks.

2nd Gear: The Government’s Secret Tesla Talks

In other Tesla news, do you remember when Tesla enthusiasts started an aggressively cringe-inducing campaign to get the White House to recognize the company’s “EV leadership?” (It ranked second in pathetic moments involving Tesla fans over the past year, losing out only to that one guy who had a dream about driving Musk to the airport.) Well, those fans can go to sleep tonight with their indignation validated, as the Biden administration apparently happens to think quite highly of Tesla, even if the President didn’t let on as much publicly. From Reuters:

U.S. President Joe Biden rarely mentions electric car maker Tesla Inc in public. But privately his administration has leaned on the company to help craft a new policy to allow electric vehicles (EVs) to benefit from the nation’s lucrative renewable fuel subsidies, according to emails reviewed by Reuters.

The Biden administration contacted Tesla on its first day in office, marking the start of a series of meetings on the topic between federal officials and companies linked to the EV industry over the months that followed, according to the emails.

The administration’s early and extensive outreach reflects that expanding the scope of the U.S. Renewable Fuel Standard (RFS) to make it a tool for electrifying the nation’s automobile fleet is one of Biden’s priorities in the fight against climate change.

The RFS basically requires transportation fuel in the U.S. to carry a minimum volume of renewable fuels, and it’s mostly served as a subsidy for corn farmers via ethanol. The White House is reportedly interested in rewarding EV makers and infrastructure promoters through a similar mechanism, and contacted Tesla in early 2021 to forge that policy.

Early signs are that the administration is leaning toward a rule that benefits carmakers like Tesla, giving them the greatest access to so-called e-RINS, or electric RINs. But the reform could also spread the subsidy to related industries too, like car charging companies and landfills that supply renewable biogas to power plants, according to industry players.

“We have heard through the grapevine that car companies are really, really going to like this rule,” said Maureen Walsh, director of federal policy with the American Biogas Council, speaking at a conference in May. But she added: “We have all been scrapping at that pile.”

So next time Biden delivers a prideful speech about all the American companies tackling electrification and climate change head-on or whatever and doesn’t name-drop Tesla, the automaker’s loyalists can be even more incensed.

3rd Gear: Event Data Recorders Should Record More Events

At least the National Highway Traffic Safety Administration thinks so. As it stands, “black boxes” capture data for five seconds preceding a crash, but the NHTSA wants to improve that to 20 seconds at a faster rate of recording, per Reuters:

The agency had studied adopting the regulation for more than three years – as required by Congress under a 2015 law. NHTSA was supposed to have finalized the new data collection rules by 2020.

Black box data is a key tool for NHTSA investigations, including crashes where advanced driver assistance systems are suspected as a factor.

NHTSA says the data provides a “comprehensive snapshot” of driver actions before a crash and can help “improve future vehicle designs and more effective safety regulations.” NHTSA used data from EDRs in its 2010 Toyota unintended acceleration probe.

It’s important to point out that event data recorders aren’t legally mandatory in consumer-sold automobiles; the overwhelming majority of carmakers install them of their own volition. There had been proposed legislation to require manufacturers to put black boxes in all their vehicles, but it was rejected three years ago:

In 2019, under former President Donald Trump, NHTSA withdrew a 2012 proposal to require EDRs in all new cars because it said automakers had voluntarily installed the devices in nearly all vehicles.

In 2006, NHTSA required for automakers that installed EDRs to collect certain data, including vehicle speed, crash forces at the moment of impact, whether an air bag deployed or if the brakes were applied in the moments before a crash and if seat belts were fastened.

The National Transportation Safety Board in 2004 recommended EDRs be made mandatory in all vehicles after a California crash killed nine people.

Still, black boxes are present in 99.5 percent of cars, per the NHTSA’s own data. What the department’s hoping to achieve, then, is force automakers to employ more capable recorders only if they wish to employ them at all, which is the shakiest of authoritative ground.

4th Gear: The BZ4X Just Got its First Recall

That collective “awww” you hear in the distance is the world’s reaction to Toyota’s EV achieving that most precious of milestones: its first recall. They grow up so fast!

Now, you might assume that as Toyota’s first mass-market battery-electric vehicle, the reason for the BZ4X’s recall must have something to do with the crossover’s software or powertrain. As it happens, no! From Financial Times:

The world’s largest carmaker issued the global recall of its fully electric SUV bZ4X on Thursday, warning that the wheels could potentially fall off because of issues with bolts that connect them to the vehicle.

The move is a blow to the Japanese carmaker’s ambitions in the global EV race — which is dominated by Tesla — after it pledged to spend $35bn to roll out 30 battery-powered models by 2030.

Among the 2,700 vehicles subject to the recall, 2,200 were designated for the European market, 280 for North America, 110 for Japan and 60 for the rest of Asia. Most of the vehicles have not been delivered to consumers.

At just 2,700 cars globally, I don’t know if I would call this a “blow,” but it is nonetheless not a great look. Wheel mounting is something that I feel like we all collectively assumed manufacturers had down pat. If you have taken delivery of one of the few BZ4Xs out in the wild, the company recommends you maybe don’t drive yours while it figures this issue out.

Toyota said it was still investigating the cause of the defect and urged owners not to drive the car until it can be repaired. No injuries or incidents have been reported so far.

“We are examining if tightening the bolts will solve the problem, or if any change in components is needed,” the company said.

A report out of Taiwan suggests the Subaru Solterra has also been recalled in Japan for the same reason. We’ve reached out to Subaru for confirmation, but it’d be surprising if the issue didn’t extend to the Solterra, as both cars are built at the same Toyota Motomachi plant in Japan.

Update 10:47 a.m. ET: Immediately after The Morning Shift went live, Subaru PR manager Todd Hill got back to Jalopnik with the following statement. Solterras are included in the recall, but none have been delivered yet:

This recall will also include 403 Subaru Solterra vehicles. No Subaru Solterras are in the possession of customers and all are being held at their locations. There have been no accidents involving the Subaru Solterra for this issue.

5th Gear: A New Plant Is Born

BMW’s newest EV-making facility in China is up and running, churning out the i3 (no, not that i3), according to Reuters:

Germany’s BMW said on Thursday that production has formally begun at a new plant in China with an investment of 15 billion yuan ($2.24 billion) as the carmaker accelerates electric vehicle (EV) production.

The Lydia plant, BMW’s third car assembly facility in China, located in the northeastern city of Shenyang, Liaoning province, will increase BMW’s annual output in the world’s biggest auto market to 830,000 vehicles from 700,000 in 2021, the company said.

The plant is designed to be capable of producing battery-powered electric cars only according to market demand on its flexible manufacturing lines, BMW said.

The first model that will roll off the Lydia plant’s production lines is the i3, a pure electric mid-sized sports sedan, BMW said, increasing the range of its EV models for Chinese customers to 13 next year.

I don’t know what’s more surprising to learn here: that BMW sells a car in China called the i3 not anything like what we knew to be the i3, or that BMW offers a range of 13 electric vehicles in the country. Here we have three.

Reverse: When a Rotary Ruled Le Mans

Image for article titled Elon Musk Says His Tesla Plants Are 'Gigantic Money Furnaces'

Photo: STF/AFP (Getty Images)

31 years ago, Mazda became the only Japanese manufacturer to win the 24 Hours of Le Mans, with the not-terribly-fast-but-reliable-enough 787B in its iconic green-and-orange livery. And that’s a distinction that will continue to stand until Toyota wins the race against legitimate factory competition. Next year’s looking good for that.

Neutral: Weekend Plans?

Yes, it’s only Thursday, but I’m off tomorrow! Friday I’m heading to a retro gaming expo in Pennsylvania where I hope to play Sega’s Scud Race, because I think it’s been like 12 years or so since I have been in an arcade and that makes me sad. Saturday we’re having a little barbecue for my mom’s birthday. What are y’all getting up to this weekend?


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