Report: Tesla CEO Elon Musk Threatens Firings Over Poor Results In China (Update)
Less than 24 hours before Tesla Motors is set to release fourth quarter and full year earnings, Reuters is reporting that CEO Elon Musk is threatening to fire and/or demote executives responsible for poor sales results of the Model S in China.
Probably not the best timing on that.
Update (Feb 11, 12:00pm): Details on recent dismissal added below
Multiple sources have indicated to the news agency that Mr. Musk has been a lot more direct (and upset) with his employees over a dismal result in China since he first announced that sales had been “unexpectedly weak” in China at the NAIAS in Detroit in January.
Musk said at the time Tesla understood the problem; specifically poor communication with the Chinese people over the charging and range abilities of the Model S, and that the company will “be in pretty good shape probably in the middle of the year.”
Well, maybe they won’t be if a Reuters report on a email the CEO circulated to his employees is accurate.
Reuters says that an internal email was sent to managers from Musk in late January, which basically threatened to fire or demote them if Tesla is “not on a clear path to positive long-term cash flow.”
It turns out, Tesla’s Chinese President Veronica Wu’s resignation in December might have just been one of the first fatalities of the new “fix it, or get it out” policy. She last about 9 months on the job since former President Kingston Chang’s “resignation” in March.
The email tells those managers who are underperforming expectations at the company that they “will be asked to leave or assume a more junior role. This has already happened in China and will likely happen in some other countries, too.”
Update (Feb 11th, 12:00pm): Bloomberg is reporting that Tesla’s VP of Communications, June Jin has now left the company, after less than a year on the job according to a phone with Tesla China spokesman Gary Tao. So it appears the purge may well be underway.
When the Tesla Mold S first went on sale in 2013, the company had expected that the Chinese market may perhaps have been as large as that of the US market by 2015. However, nothing close to that reality has materialized so far.
Recent guidance has indicated the company expects the North American side of the business to be equal to, if not greater, than the rest of the world in 2015.
Reuters also added that the CEO, in a direct statement to his executive, said that they will be accountable for their decisions to “retain any personnel not involved in vehicle production” and that country managers must consider “dropping specialized roles … or even doing it personally in weak markets where a full-time person isn’t justified.”
“We have no choice in this regard. There is no way that we can afford to subsidize a region of any size in the long term without causing serious harm to the company.”
As at time of press, Tesla has had no comment on the matter. We imagine the situation will be addressed upon release of the Q4 results tomorrow at 2pm (pacific) and in the subsequent conference call.
Currently in China, Tesla has nine stores and service centers spread over 6 cities.