Tesla To Slash Chinese Workforce By 30% Due To Low Model S Demand

MAR 10 2015 BY MARK KANE 20

Tesla Model S Supercharging In China

Tesla Model S Supercharging In China

The Chinese New Energy Vehicle market (mostly EVs) is booming, with a growth rate of several hundred percent year-over-year.

On first glimpse, this should provide for a great opportunity for strong sales from newcomers like Tesla Motors. However it now seems almost certain that Tesla is struggling with Model S sales in China.

Poor sales resulted in some recent personnel rotations, and now Chinese sources are stating that some 30% of the Tesla China work-force will be relieved of their position.

“Tesla will eliminate some positions as it makes structural changes to its business in China, Gary Tao, a local spokesman for the carmaker, said Monday by phone. He said he didn’t know how many jobs will be affected. The Chinese newspaper Economic Observer reported earlier Tesla will eliminate 180 of the 600 positions at its China unit because sales haven’t met expectations.

“The purpose is to better respond to the Chinese market,” Tao said. “The team remains stable and strong.”

Meet The New Boss - Veronica Wu (Photo via The Reserve)

Veronica Wu (Photo via The Reserve)

The current personnel changes started at the beginning of the year, Tao said, declining to provide additional details. The Economic Observer said Tesla’s local sales department will cut half its workforce, the most among all its departments, including marketing, public relations and administrative offices.

Local executives including Veronica Wu, Tesla’s former China president, and June Jin, former vice president of communications, have recently left the company. Musk said in January sales in China have been slow because of concerns consumers have over charging electric vehicles.”

The China situation at Tesla must be a hot one. Some local news outlets are reporting that only half of the 5,000 Model S imported in 2014 were actually sold to end-users. Sales so far this year are reported to be very low.

“In fact, Tesla drastically underestimated the complexity and difficulty of the China market. The initial Tesla fad dried up rapidly. According to official data, only half of the 5,000 imported Model S were sold to end-users in 2014. Tesla wanted to build charging stations using its own standard, not willing to make compromises to local authorities. Elon Musk’s cowboy like, one-man-against-the-whole-world mentality failed in China. Other foreign OEMs that came into market earlier as well as local players understand the dynamics of the China market much better, progressing in much smaller steps in the EV market.”

Source: Bloomberg, China Automotive Review

Categories: Tesla

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20 Comments on "Tesla To Slash Chinese Workforce By 30% Due To Low Model S Demand"

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I have no doubt Tesla will make it in China its just a matter of time.

They are looking for possibilities to ship some of the unsold model S to South Korea and try to sell them there I read a few days ago.

Is it just a simple language setting in the software, or would it be more involved than that? Safety standards?

Mark Kane:
You guys should have included the monthly Tesla vehicle registration data. I saw the article in the WSJ and it looked like Tesla sales were very consistent at around 450 per month….yes not wonderful but consistent. There was no tapering off in the monthly numbers.

“30% of Tesla China the wok-force will be relieved of their position.”

What is a ‘wok-force’? I’m hoping it’s just a typo but if this was intentional to make fun of Chinese accented English, then that says a lot about the author. (also should re-position the ‘the’)

“Wok Force”…?

🙂 !!! Thanks, I needed that this a.m. !

Oh Em Gee – That is funny!

wok-force……that’s brilliant! Bravo!!!!

“Elon Musk’s cowboy like, one-man-against-the-whole-world mentality failed in China.”

Elon, you’re not in Kansas any more.

Not to mention most of the people there only make a few bucks a day it was bound to happen why no one would buy a $100,000 Car.

You know that the Chinese luxury car market is the worlds largest?

It’s like saying that no one would by the Model S in the US because of the high number of poor people there and the very low minimum wage for workers.

World’s largest middle-class right now. Yeah, the money is there.

From what I saw when I was in Asia, just slap a cellphone on the dash and they’ll buy 100,000s.

They were physically attached to their phones even before we were physically attached to our phones!

Wireless charger in dash or console, make sure it’s a Huwei, or other Chinese phone ( they’re all made there anyway ). Sync with center display. Done!

The model S is a very expensive item. It seems in a Communist country it’s best to enter with the Model III first. The Chinese mindset is steeped in government brainwashing. Sure, government officials can afford such a car – but Buick’s are best-sellers there. The whole performance mindset of the West is so different than their view of what is cool. I’m also not sure if Tweeting is so effective in China – Tesla needs to advertise there.

I guess by government brainwashing you mean that they have put in the love of luxury cars into peple minds.
There is a reason why it’s the worlds largest luxury car market.

“it’s the worlds largest luxury car market.” It’s only true in a literal sense. Luxury car market is limited to several brands. Mostly – well, pretty much only European (i.e. Lexus is not really considered to be a luxury brand from a upper class’ wealth prospective). No US vehicles are considered real luxury vehicles (not even Tesla especially due to its short history). Most importantly, the mindset of the true upper class toward purchasing luxury automobile is almost utterly different than, say, European or Americans. Those belong in this class category DO NOT DRIVE THE VEHICLE THEMSELVES. THEY SIT IN THE BACKSEAT. They have chauffeur to drive them around. The ways to show their wealth are the size, luxury items (interior/exterior, such as massage chair in the back), safety (they definitely expect almost no injury when in a crash, even bullet proof doors and windows), and…SLOW DRIVING SPEED by the chauffeur (to minimize any chance of accident). So tell me, what good does it do with Tesla with the super quick acceleration (works against the mindset), lack of luxury options at the back seat, useless infotainment system in the front (since they sit at the back), etc.? That’s the $100K+… Read more »

My point was rather that there are A LOT of chinese people that have that kind of money and use it already toward buying expensive cars.
Some don’t seem to understand how far along China is.

So the problem with low sales numbers for Tesla in China lies elsewhere. And you mentioned some of the reasons like a poor back seat where the owner most likely will sit, not luxurious enough etc.

I think that in China there are plenty of people who want a Tesla, but that they are younger, more tech oriented, and cannot yet afford one.

Clearly the entry into China has been based on some bad assumptions. Just how these came about, I am not sure. Errors by Chinese personnel? Musk imposing an alien sales model despite good advice? A combination of these? Poor internal communication?

We don’t know. We do know that Musk doesn’t give up, ever, and won’t here either. But it’s a setback. There is no sense denying that.

Between this and the mall incident, something tells me the Chinese government does not want Tesla or any other American brand dominating their future EV market or being desired in the minds of their population.

Brands of EV’s not produced in China will never dominate their market.

But of non-domestic brands and/or domestic produced cars there is no reason for the chinese government to make any difference between german, french or US manufacturers.

I think the mall incident is too subtle to be some kind of government-sponsored sabotage. I’d believe that if Teslas started exploding, but in this case, stuff like that happens.

Model S rear seat area is small compared to rear seat of ICE luxury sedans.