Tesla Trouble: CEO Prepared To Fire Executives Over Very Weak Chinese Sales

3555 Views 48 Replies 24 Participants Last post by Sox, Feb 14, 2015

Perian

Discussion Starter · Feb 11, 2015

Reuters.com

February 11, 2015

Article Quotes:

Tesla Motors Chief Executive Elon Musk is prepared to fire overseas executives, people with knowledge of the matter said, after weak Chinese sales of the company's luxury electric cars cast doubt on his ambitious global expansion plans.

Tesla sold about 120 cars in China last month, one of the sources told Reuters, well below the company's aggressive targets. Musk has previously said he expected China sales could rival those in the United States as early as 2015.

Tesla shares slumped 7 percent on Jan. 13 after Musk said China sales were "unexpectedly weak" during the fourth quarter. "We'll fix the China issue and be in pretty good shape probably in the middle of the year," Musk added at the time.

He was more blunt in an internal email to managers in late January, threatening to fire or demote country managers if they are "not on a clear path to positive long-term cash flow," according to two people who have seen the email.

While Tesla sales in many overseas markets from Europe to Asia have not met expectations - and executives have subsequently been fired or demoted - results have fallen far short in China, a key market for Musk's expansion strategy.

Musk has said Tesla plans to boost annual production from a projected 50,000 cars this year to 500,000 by 2020, with the United States and China as the company's two largest markets. In January, Musk made an even more bullish projection that production would reach "a few million" cars a year by 2025.

Musk in the internal email said underperforming company managers in overseas markets "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."

Tesla may outline its planned response to those setbacks as early as Wednesday, when Musk is scheduled to present quarterly earnings to investors.

"China has been a big disappointment and that's bound to impact company goals," a person close to the company said. "So they need to show that they are taking some action to cut costs."

Tesla managers received a pointed message in Musk's internal email.

Executives will answer for their decisions to "retain any personnel not involved in vehicle production," Musk said, citing finance, HR, communications and IT as examples.

"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."

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Perian

Discussion Starter · #2 · Feb 11, 2015

Perian said:
Musk has said Tesla plans to boost annual production from a projected 50,000 cars this year to 500,000 by 2020, with the United States and China as the company's two largest markets. In January, Musk made an even more bullish projection that production would reach "a few million" cars a year by 2025.

"China has been a big disappointment and that's bound to impact company goals," a person close to the company said.

It is not possible in today's business climate not to do "well" in China and succeed as an automotive entity.

This is a huge problem for Tesla, and they need to solve it yesterday.

In addition, the Model "S" needs an immediate MCE to keep it relevant in it's elevated marketplace position. Wealthy people like new, shinny and state-of-the art toys. When 'everyone' in the neighborhood is in the 'club', the product loses some of its attractiveness. The Model "X" is a year late (I would not touch one without a 10 year warranty on the rear doors), the Model "E" is a huge price/profit gamble, and the Model "Y" is still on a drawing board as other CUVs shine.

While I admire Mr. Musk and wish him and his company well, I have a feeling that this is SO not going to end well.

SKH

· #3 · Feb 11, 2015

Perian said:
The Model "S" needs an MCE to keep it relevant in the marketplace, the Model "X" is two years late, the Model "E" is a huge price gamble, and the Model "Y" is on a drawing board as other CUVs shine.

This is SO not going to end well.

Musk is clearly a brilliant guy but his sales projections are full on P.T. Barnum in nature. I'd heard the 500,000 sales by 2020 claim, but the few million by 2025 is new to me. I think the wheels are coming off of the Tesla mass production wagon. They can survive as maker of high end boutique Electric cars, but BMW, GM, Toyota etc will eat Tesla's lunch in the lower segment of Electric car market. Tesla simply does not have the economies of scale that the traditional manufacturers have imo.

Reactions: 1

ZR2BlaZeR2

· #4 · Feb 11, 2015

I wouldn't over look issues with China's infrastructure or lack there of. China has gotten too big too fast and now they realize that electric vehicles will be a must in their country moving forward. But nobody over there lives in the suburbs where then can plug their Model III into the wall of the garage. Elon needs to build out the Supercharger network over there.

The giga factory will play a significant role in any issues with economies of scale. But "millions" of cars by 2025. I'm not seeing that, even being a huge Tesla fanboy.

As for GM, Toyota and BMW eating Tesla's lunch? I think the three of them (BMW to a lesser extent) need to focus on their own internal issues before they try to squeeze Tesla out of the game. If you ask me, GM and Toyota are a generation of car buyers away from taking a dirt nap if they don't put out some more compelling products that people can actually afford. Ford and Chrysler will be eating their lunch for sure.

SKH

· #5 · Feb 11, 2015

ZR2BlaZeR2 said:
I wouldn't over look issues with China's infrastructure or lack there of. China has gotten too big too fast and now they realize that electric vehicles will be a must in their country moving forward. But nobody over there lives in the suburbs where then can plug their Model III into the wall of the garage. Elon needs to build out the Supercharger network over there.

The giga factory will play a significant role in any issues with economies of scale. But "millions" of cars by 2025. I'm not seeing that, even being a huge Tesla fanboy.

As for GM, Toyota and BMW eating Tesla's lunch? I think the three of them (BMW to a lesser extent) need to focus on their own internal issues before they try to squeeze Tesla out of the game. If you ask me, GM and Toyota are a generation of car buyers away from taking a dirt nap if they don't put out some more compelling products that people can actually afford. Ford and Chrysler will be eating their lunch for sure.

And yet Toyota's sales keep going up, so obviously there is not a shortage of people able to afford their cars, or GM's for that matter.

Reactions: 2

Perian

Discussion Starter · #6 · Feb 11, 2015

ZR2BlaZeR2 said:
As for GM, Toyota and BMW eating Tesla's lunch? I think the three of them (BMW to a lesser extent) need to focus on their own internal issues before they try to squeeze Tesla out of the game. If you ask me, GM and Toyota are a generation of car buyers away from taking a dirt nap if they don't put out some more compelling products that people can actually afford. Ford and Chrysler will be eating their lunch for sure.

Note:

BMW is reportedly pushing forward with development of its next i-Series model, likely named the i5 or i7, to serve as a direct rival to the Tesla Model S.

Referred to internally by the monicker F18, the plug-in hybrid vehicle is expected to be based on a long-wheelbase version of the next-generation 5-Series platform, unnamed sources have told Car.

The external design is said to blend elements of the existing 6-Series Gran Coupe and the next-generation 7-Series sedan, though the aesthetics have yet to be finalized.

The powertrain is reportedly adapted from the i8, pairing batteries with an internal-combustion range extender. Separate electric motors are expected to deliver 204 horsepower to the front wheels and 95 ponies to the rear, while the four-cylinder engine would produce around 245 horsepower. Electric-only operation is said to be good for 80 miles.

SKH

· #7 · Feb 11, 2015

Do we know how many cars Tesla sold WW in 2014?

SKH

· #8 · Feb 11, 2015

Perian said:
Note:

BMW is reportedly pushing forward with development of its next i-Series model, likely named the i5 or i7, to serve as a direct rival to the Tesla Model S.

Referred to internally by the monicker F18, the plug-in hybrid vehicle is expected to be based on a long-wheelbase version of the next-generation 5-Series platform, unnamed sources have told Car.

The external design is said to blend elements of the existing 6-Series Gran Coupe and the next-generation 7-Series sedan, though the aesthetics have yet to be finalized.

The powertrain is reportedly adapted from the i8, pairing batteries with an internal-combustion range extender. Separate electric motors are expected to deliver 204 horsepower to the front wheels and 95 ponies to the rear, while the four-cylinder engine would produce around 245 horsepower. Electric-only operation is said to be good for 80 miles.

And this is the kind of stuff that will severely limit Tesla's expansion.

bicentennialcadillac

· #9 · Feb 11, 2015

Very quietly, Tesla's Supercharger network has been making key connections across the US. I like the i3, but where is BMW (or GM and Nissan for that matter) on the charging infrastructure front? The Tesla charging network that is already on the ground will put Model X and Model 3 at a distinct advantage.

ZR2BlaZeR2

· #10 · Feb 11, 2015

SKH said:
And yet Toyota's sales keep going up, so obviously there is not a shortage of people able to afford their cars, or GM's for that matter.

Kind of like the housing bubble huh? How long will the economy sustain $70k Suburbans and $60k trucks when all the boomers buy their last car? Or maybe even a $40k Camry? $28k for a Trax? Give me a break.

Millenials will be busy paying back the robber-baron universities. Tell me what car GM or Toyota have now or in the works that would make me want to buy into the brand in the near future?

They'll want electric cars for many, many reasons. Tesla is already in hearts and minds. GM will likely never shake its stigma among the young that were affected by the Recession. Those companies aren't going after hearts and minds with their current offerings.

tripowergto

· #11 · Feb 11, 2015

bicentennialcadillac said:
Very quietly, Tesla's Supercharger network has been making key connections across the US. I like the i3, but where is BMW (or GM and Nissan for that matter) on the charging infrastructure front? The Tesla charging network that is already on the ground will put Model X and Model 3 at a distinct advantage.

How quickly can one charge a nearly depleted Tesla at one of these Supercharger stations?

eaton53

· #12 · Feb 11, 2015

tripowergto said:
How quickly can one charge a nearly depleted Tesla at one of these Supercharger stations?

May as well get a bite to eat and use the restroom. Hopefully there's a place nearby because you'll have plenty of time.
How much to import one of these into China anyway? They've got to be some really serious money.

BlackGTP

· #13 · Feb 11, 2015

The Chinese seem to like the Buick name for historical reasons, however, Tesla has no history. I wonder if lack of history is a negative for Tesla. Seems like there are 100+ different brands in China, without that history is Tesla just lost in all those brands?

SKH

· #14 · Feb 11, 2015

eaton53 said:
May as well get a bite to eat and use the restroom. Hopefully there's a place nearby because you'll have plenty of time.
How much to import one of these into China anyway? They've got to be some really serious money.

And if there are other people waiting to charge their Tesla get in line!

SKH

· #15 · Feb 11, 2015

bicentennialcadillac said:
Very quietly, Tesla's Supercharger network has been making key connections across the US. I like the i3, but where is BMW (or GM and Nissan for that matter) on the charging infrastructure front? The Tesla charging network that is already on the ground will put Model X and Model 3 at a distinct advantage.

Yeah and if you drive across country you have to go one of a very few routes. At least with a gasoline powered car (or a Volt) you can go pretty much any route that you choose as long as there is a gas station and those are literally everywhere.

Unless Tesla talks other manufacturers into adopting their charging technology, they'll find it financially very difficult to build enough of them to nullify range anxiety.

Ambalanche

· #16 · Feb 11, 2015

I don't see China as a "Green" car company country. What with all the factories spewing smog making my iPhone!

eaton53

· #17 · Feb 11, 2015

SKH said:
And if there are other people waiting to charge their Tesla get in line!

Have brunch.

Reactions: 1

Butz

· #18 · Feb 11, 2015

BlackGTP said:
The Chinese seem to like the Buick name for historical reasons, however, Tesla has no history. I wonder if lack of history is a negative for Tesla. Seems like there are 100+ different brands in China, without that history is Tesla just lost in all those brands?

History doesn't matter when building great cars. History only matters when building merely adequate cars.

Ambalanche said:
I don't see China as a "Green" car company country. What with all the factories spewing smog making my iPhone!

Out of necessity they will have to be.

China is investing in infrastructure. Just look at how fast they grew their HSR network or the Beijing subway!

Reactions: 1

richmond2000

· #19 · Feb 11, 2015

Butz said:
History doesn't matter when building great cars. History only matters when building merely adequate cars.

Out of necessity they will have to be.

China is investing in infrastructure. Just look at how fast they grew their HSR network or the Beijing subway!

with ever increasing smog/pollution "issues" and cities having usage restrictions in place already I SEE China becoming WAY "GREENER" then the USA ever will + DIRECT intervention from the state helps a LOT

as for Tesla I thought China heavily subsidize there battery/ EV car makers in a bid to "dominate" the ELECTRIC CAR" segment + I doubt Tesla has the BRAND "value" that BMW/Audi have

ZR2BlaZeR2

· #20 · Feb 11, 2015 (Edited)

eaton53 said:
Have brunch.

What is the charge time? Like 80% capacity in 20mins? Heaven forbid we have to actually plan our day accordingly if we plan on driving more than 200 miles. Kind of makes you wonder how the Pioneers ever made it across the continent.

I love the pleasure taken in any small amount of Tesla failure around here. I think is shows a bit of the underlying insecurity of being a GM fan or just an inability to see the writing on the wall.

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