Tesla's German Factory Has Lost Billions Of Dollars

The European Automobile Manufacturers Association (ACEA) has released its latest sales figures, according to Automotive News. In June this year, European new car sales were approximately 1.066 million units, down 17 percent year-on-year.

Compared with May's 12.5% year-on-year sales decline, the overall European car market further expanded its sales decline in June. New car sales in Europe have fallen year-on-year for 12 consecutive months, while hitting the lowest level for the same period in nearly 26 years.

Tesla's German factory loses money due to supply chain troubles

LMC automotive, an automotive market forecaster, lowered its full-year passenger car sales forecast for Western Europe again this month, the fifth time this year. The agency expects new vehicle deliveries in Western Europe to be 9.8 million units this year, down 7.4 percent from a year earlier. In addition, the agency said, "Supply chain issues will continue to constrain European car sales."

In March, Volkswagen Group warned that the automotive industry was facing increasing challenges and that its growth prospects for 2022 could be affected given the semiconductor shortage, supply chain bottlenecks, high commodity prices and the Russia-Ukraine conflict. Volkswagen Group CEO Herbert Diess said the company is relocating more production tasks from Europe to regions such as China and the Americas to deal with supply chain issues. "We are taking a cautious view on the outlook for next year." Dees said.

Local European car giants are considering shifting production tasks, and foreign brands are not doing well in Europe as well. Tesla CEO Musk said recently that the Berlin plant has lost billions of dollars due to battery supply shortages and port problems that have made it difficult to expand capacity. He said, "The Berlin plant is a huge 'burning' furnace, with machines making a huge roar, that's the sound of money burning."

In addition, according to Forbes, Tesla's Berlin superfactory can currently only produce Model Y electric cars in exterior colors of black or white, and European customers who want to order Model Y in other colors will have to wait until next March for delivery. Tesla expects global production to increase by 50 percent this year, a large part of which will come from the capacity growth of the Berlin, Germany, and Austin, U.S. superfacilities. But analysts believe that the two factories produced a total of about 6,000 cars in the second quarter, Tesla's capacity targets are feared to be difficult to achieve.

A report by Bloomberg Industry Research predicts that European car sales will rebound in the second half of this year. The report said that because of the poor performance of European car sales in July last year, European car sales in July this year are likely to end 12 consecutive months of year-on-year decline, but this will not make up for the decline in the first half of the year.

Car market, car companies fell in general

Relevant data show that in June, the five major European car markets (the United Kingdom, Germany, France, Italy, Spain) sales fell year-on-year. Among them, the United Kingdom new car sales fell the most, down 24.3% year-on-year; Germany, Italy, France's new car sales are a percentage of double-digit decline; Spain's new car sales fell the least, down 7.8% year-on-year. From January to June this year, the cumulative number of new car registrations in Europe was about 5.6 million, much lower than the 6.49 million units in the same period last year.

From the perspective of car companies, in June, Volkswagen Group's new car registrations in Europe were about 255,000 units, down 82,000 units from the same period last year and down 24.4% year-on-year; in the first half of this year, Volkswagen Group's new car registrations were about 1.35 million, down 19.4% year-on-year. Stellantis, the second largest auto group in Europe, registered 215,000 new vehicles in June this year, down 16.5% year-on-year; in the first half of this year, Stellantis registered 1.087 million new vehicles, down 21.1% year-on-year. It is worth mentioning that among the mainstream car companies, Renault Group is the only car company that saw a year-on-year increase in sales in Europe and took back the title of the third best-selling car company in Europe from Hyundai Motor Group.

The good news is that the overall penetration rate of new energy vehicles in Europe is still gradually increasing from the perspective of new energy vehicle sales. However, stakeholders still expressed concern. "The strong performance of electric vehicles is very welcome news." ACEA President and BMW Group CEO Zipser said, "We must not forget that this is still a rather fragile market, which is highly dependent on subsidies such as purchase incentives and also the spread of charging infrastructure."

According to Spiegel, the German economy ministry wants to end subsidies for plug-in hybrids early at the end of this year and reduce cash subsidies for electric vehicles by a third starting in 2023. German consumer confidence has been at its lowest level in 31 years, and if there is a recession in Germany, consumer confidence may fall further, thus affecting the market demand for all models.

In addition, according to The Times, the British government cancelled its policy of providing £1,500 subsidies for electric cars in June. The UK government revealed that the success of the UK's electric vehicle revolution was one of the reasons for the decision. In the first five months of this year, nearly 100,000 pure electric vehicles were sold in the UK. In addition, UK Transport Minister Trudy Harrison said, "If the electrification transition is to continue, it is vital that government funding stays invested in the areas that will have the greatest impact, such as cabs and delivery vans."

About Author
John Murphy

John Murphy is the founder of TOPCARS Tesla Aftermarket Accessories, as well as an investor in Tesla and owner of the Model Y. He posts about Tesla news while running the site on a daily basis.

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