Elon Musk is worried that Tesla is about to go bankrupt: Is the situation extremely urgent?

Tesla is facing billions of dollars in losses at its new factories, supply chain issues, and the coronavirus lockdown in China.

All of those issues led CEO Elon Musk to mention the possibility of Tesla bankruptcy in a recent interview.

"The past two years have been a real nightmare for the supply chain, one problem after another. We still haven't been able to get out of it. It's all made us worry about how we can get through. maintaining factories, paying employees and how not to go bankrupt."

Of course, it's possible Musk is "overstating" the Tesla situation. However, according to analysts, the company is also entering the final days of the most difficult quarter for them, in more than two years.

Tesla's factory in Shanghai has been closed for weeks because of the Covid blockade order. And Musk revealed in the interview that the two factories they opened this quarter in Germany and Texas, USA are also burning billions of dollars due to supply chain problems.

"Both factories in Berlin and Austin are huge 'money burners'," Elon Musk said in a recent interview.

In the last few years, Tesla has prioritized building new factories in different locations around the world. Since then, it has become cheaper to distribute cars in the largest markets. Many factories also raise the maximum level of car production each year.

Tesla is still in the process of trying to recover from a severe output slump caused by Chinese government restrictions as well as persistent supply chain pains.

Morgan Stanley analyst Adam Jonas on June 22 pointed to the China disruption as part of the reason he lowered his Tesla stock price target from $1,300 to $1,200 a share. He still maintains his recommendation that investors should increase the proportion of Tesla shares in the portfolio.

Tesla is one of many automakers who have expressed concern about supply chain difficulties. In April, Rivian CEO RJ Scaringe said electric vehicle battery shortages could soon wreak more havoc on the auto industry than a shortage of computer chips. Last year, Ford CEO Jim Farley said the chip shortage had caused the "biggest supply shock" he had ever seen.

Earlier, sharing with Bloomberg reporter John Micklethwait, Elon Musk showed an insight into Tesla's operations in recent days, after the company decided to cut 10% of its official staff. , at the same time recruiting more contract workers. This decision will be made within the next 3 months.

This means that Tesla will only lay off 3.5% of employees and this number is not too large to affect production. Currently, official employees account for two-thirds of Tesla's total employees, the rest are contract workers.

One of Tesla's critics, Gordon Johnson, says the company is facing bigger financial problems than most experts realize.

"Bankruptcy is the real risk to them. Why? A lot of money is locked up in China. Tesla is having a real problem."

Johnson points out that Tesla's decision to reduce staff is another signal of obvious difficulty.

"Why do you think they're cutting staff. That's the clearest signal."

However, most companies that cut staff are not on the verge of bankruptcy. And in fact other analysts also predict that Tesla will remain profitable, despite the supply chain problems that are plaguing them and most other manufacturers around the world.

Tesla has been profitable since late 2018 after years of losses. The company has reported an increase in profit for the following quarter compared to the same period last year for the past two years. But this golden period seems to be coming to an end.

Experts predict that Tesla's adjusted profit in the second quarter of this year will fall to $2.5 billion, down from $3.7 billion in the first quarter. However, the figure for the second quarter is still higher than the level. $1.6 billion in Q2 2021.

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