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Volkswagen boss says new factories will 'take strength out of' Elon Musk

Business Insider logo Business Insider 6/28/2022 (Grace Kay)
Tesla CEO Elon Musk, left, and Volkswagen CEO Herbert Diess. Brendan Smialowski and Tobias Schwarz/AFP via Getty Images © Provided by Business Insider Tesla CEO Elon Musk, left, and Volkswagen CEO Herbert Diess. Brendan Smialowski and Tobias Schwarz/AFP via Getty Images
  • Volkswagen boss Herbert Diess said Tesla's new factories could "take strength out of" Elon Musk.
  • In a prior interview, Musk said factories in Texas and Berlin have become "gigantic money furnaces."
  • Tesla and Volkswagen are both vying for the title of largest EV company in the world.

Volkswagen boss Herbert Diess said Tesla's new factories could cause growing pains for Elon Musk and his electric-car company.

"Elon has to ramp up two highly complex factories in Austin and Gruenheide at the same time — as well as expand production in Shanghai," Diess said on Tuesday, Reuters reported. "That's going to take strength out of him." 

The German CEO made the comment at a meeting that addressed the impact of supply-chain snags on Volkswagen production goals, according to Reuters. Diess said that Tesla's supply-chain struggles could pave the way for Volkswagen to overtake the car company in the EV market, per Reuters.

A spokesperson for Tesla did not respond to a request for comment from Insider.

Diess' concerns for Tesla echo Musk's. Last week, the Tesla CEO warned in an interview with Tesla Owners Silicon Valley that the carmaker's new factories in Texas and Berlin had become "gigantic money furnaces" that were losing billions of dollars.

Video: Musk: Tesla's new factories 'losing billions' (Reuters)

At the time, Musk said electric-car battery shortages and supply-chain snags caused by the Shanghai lockdown were making it difficult to ramp up production at the factories and that they had only managed to manufacture a "tiny" number of vehicles.

Tesla opened both factories in Austin, Texas and Berlin, Germany in 2022. But, the company's largest manufacturing facility is in Fremont, California.

Meanwhile, Reuters reported that Diess said in the meeting on Tuesday that Volkswagen is ramping up production in Germany and China because shortages of semiconductor chips have begun to ease.

Volkswagen has pushed further into the electric-car industry in recent years. In April, Scott Keogh, CEO of Volkswagen's US branch, told Insider's Tim Levin that he sees electric cars as a way for the carmaker to capture more of the US market.

"It's sort of like an F1 race to me," Diess said. "This is your chance to be in the first two rows at the start of the race, as opposed to, if we do anything internal combustion engine, we're in the 12th row."

While Tesla still owns 75% of the market share for electric cars in the US and 14% of the global share, Volkswagen is close on its tail. Last year, Volkswagen claimed about 11% of the global EV market and doubled its sales from 2020.

Experts have warned that Tesla will likely lose its crown. In June, Bloomberg Intelligence predicted that the carmaker could lose the title of largest in the world by 2024. The report said that Volkswagen was likely to claim the title.

Even Musk has acknowledged Volkswagen's success in the industry. In May, the billionaire said during an interview with Financial Times that Volkswagen has made the most progress in the electric-car market outside of Tesla.

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