Logistics bottlenecks have plagued American businesses since COVID-19 and the lockdown-induced economic issues, especially due to key Asian manufacturing economies shuttering production.
“Just been trying to keep the factories operating the last couple years has been a very difficult thing, like supply chain interruptions have been severe, like extremely severe,” Musk said in a Tesla Owners Silicon Valley interview published Wednesday, per CNBC. “The past two years have been an absolute nightmare of supply chain disruptions, one thing after another, and we are not out of it yet.”
In one recent National Association of Manufacturers survey, almost 60% of business leaders said that inflationary pressures “make a recession more likely in the next 12 months,” while more than 90% pointed to higher raw material costs as one of their “primary business challenges” in the second quarter of 2022. The Producer Price Index (PPI) rose 10.8% from May 2021 to May 2022, according to a report released earlier this month by the U.S. Bureau of Labor Statistics.
Indeed, Musk said that the shortages are causing Tesla’s facilities around the world to hemorrhage cash.
“Both Berlin and Austin factories are gigantic money furnaces right now… It should be like a giant roaring sound which is the sound of money on fire,” Musk said in the interview. “Berlin and Austin are losing billions of dollars right now because there’s a ton of expense and hardly any output. Getting Berlin and Austin functional and getting Shanghai back in the saddle fully are overwhelmingly our concerns. Everything else is a very small thing basically.”
Though the worldwide supply chain bottlenecks began overseas, economic phenomena in the United States also delayed consumer goods from reaching shelves. Trucking companies — which were already battling to hire more drivers before the economic downturn — faced a labor shortage exacerbated by government stimulus money and the return of consumer demand.
President Joe Biden’s attempted COVID-19 vaccine mandate threatened to shutter nearly 40% of truckers from the job market. The policy, however, was overturned by the Supreme Court thanks in part due to a lawsuit from The Daily Wire.
Tesla and other automakers have been particularly threatened by a global shortage of semiconductors. Between May 2021 and May 2022, the price of new and used vehicles soared 13% and 16%, respectively.
Companies are therefore racing to increase semiconductor production in the United States. Last year, for example, Samsung announced that it would build a $17 billion semiconductor factory in Texas, representing the largest foreign direct investment in the state’s history.
Meanwhile, Gov. Ron DeSantis (R-FL) said earlier this year that he would invest the state’s funds to increase microchip manufacturing so that the Chinese Communist Party cannot “hold our supply chain hostage.”
“We have to start standing up as Floridians and Americans,” DeSantis said at a press conference. “We cannot be captive. Key sectors of our economy should not be captive to some of these foreign nations, particularly outfits like the Communist Party of China.”