Less than a year ago Elon Musk arrived in China full of confidence that the world’s largest economy could also become the largest market for Tesla Motors in short order. Unfortunately for Musk and some high-level executives, sales of the Model S in China have been dismal, leading Musk to threaten firings in a memo leaked to Reuters.
Last month Tesla sold just 120 Model S sedans in China , far short of Musk’s lofty ambitions that China sales would rival U.S. sales as early as this year. Tesla had seemed to get off to a great start with over 4,000 reservations, but sustained sales have remained elusive, and that means heads will roll. Musk has already demonstrated his willingness to replace ineffective cogs, having already replaced Tesla’s China manager twice, first back in March of 2014 when Kingston Chang was asked to step down, and more recently with the firing Veronica Wu, who had replaced Chang.
Musk isn’t taking any prisoners in his quest to electrify transportation writing in the memo that underperforming managers “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.” I have to say, I don’t like the sounds of that second part, as it implies China isn’t the only problem area for Tesla sales.
“We have no choice in this regard,” the memo from Musk goes on. “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.” Again, not exactly inspiring words from a guy whose ambitions literally reach beyond our atmosphere. Musk has already admitted to during a recent speech that breaking into China was hard then he thought, given the lack of available charging stations and a general distrust of electric vehicles. That said, plug-in car sales in China are growing exponentially, and Tesla could benefit from a recent surge of interest and incentives that could propel sales to the stratosphere.
But what if Tesla can’t turn around sales in China? Musk has admitted that China will play a big role in getting Tesla to its lofty sales goals, and right now the electric automaker has a lot of catching up to do. Can Musk turn Tesla’s China strategy around with a change of leadership?