(Bloomberg) — As Elon Musk is busy revamping newly acquired Twitter Inc., Tesla Inc. is facing increasingly pressing issues and testing the faith of some of its chief executive’s biggest fans.
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Weakening demand in China is forcing the electric vehicle maker to slow production and delay hiring at its Shanghai plant. Its senior manager for this market has been brought in to help out at its new plant in Texas, which is not developing as expected. And Tesla stock, which has lost more than $500 billion in market value this year, is coming under renewed pressure as Musk advisers weigh in on using the billionaire’s shares as collateral for new loans to replace the Twitter debt.
The revelations of the past few days have raised concerns among shareholders already worried about Musk’s priorities since taking over the helm of yet another company.
“Tesla’s board is missing action,” Leo KoGuan, one of Tesla’s largest individual shareholders, tweeted on Wednesday, suggesting a stock buyback. He and another outspoken Tesla investor, Ross Gerber, are asking the board to add a director who would represent retail shareholders.
Musk himself has said he has “too much work” on his plate and takes care of it by sometimes sleeping at the desk. While in the past it slept at Tesla’s facility, it recently hibernated at Twitter’s San Francisco headquarters.
“I continue to oversee both Tesla and SpaceX, but the teams there are so good that often not much is needed from me,” Musk tweeted Thursday. “Tesla Team has done incredibly well, despite extremely difficult times,” he said earlier in the day, citing the European energy crisis, China’s housing slowdown and U.S. interest rates as challenges. macroeconomics.
The recent volatile period blurs the end of a year in which Tesla is still expected to achieve record sales and retain its crown as the world’s largest electric vehicle maker. It has not been immune to the slowdown in the Chinese auto market and recessionary conditions in Europe, however. In October, Chief Financial Officer Zachary Kirkhorn said the company expects to achieve just under the 50% growth in vehicle deliveries that the company has repeatedly said it expects over several years.
Tesla’s plant in Austin, Texas is moving slower than expected, with a new form of lithium-ion battery cells not yet ready for volume production. In this context, the company has brought in Tom Zhu, a key executive in China who oversaw the construction of the Shanghai plant, to oversee operations in Austin, Bloomberg reported on Wednesday.
In Shanghai, Tesla is shortening production teams and delaying start dates for some newly hired employees, Bloomberg reported on Thursday, the latest signs that demand for Tesla electric vehicles in China is falling short of expectations. It came after Bloomberg reported earlier this week that Tesla planned to cut output from the Model Y and Model 3 production lines in Shanghai by around 20%.
Tesla will have a lot to do in 2023. The company recently started delivering its long-awaited tractor-trailer several years behind schedule and is finally planning to start producing its first pickup truck, the Cybertruck.
The redemption requested by certain investors could also be considered. Musk said on the company’s latest earnings call that the board generally believes a buyout makes sense and something in the $5-10 billion range is possible. Last month, he tweeted that the decision would be up to Tesla’s directors.
Musk and Tesla did not respond to requests for comment Thursday. A company representative earlier said Bloomberg’s report on plans to cut production in Shanghai was “wrong,” without giving further details.
Tesla shares slid less than 1% at the close in New York, trading lower for a fourth consecutive day. The stock has plunged 51% this year.
–With the help of Chunying Zhang.
(Updates with Musk’s tweet in sixth paragraph, closing stock price in last paragraph)
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