(Bloomberg) — While Elon Musk is busy overhauling newly acquired Twitter Inc., Tesla Inc. faces increasingly pressing problems and is testing the faith of some of its CEO’s biggest fans.
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Slacking demand in China is forcing the electric vehicle maker to slow production and postpone hiring at its Shanghai plant. Its top manager for that market has been brought in to help at its latest plant in Texas, which is not ramping up as planned. And Tesla’s stock, which has lost more than $500 billion in market value this year, is under renewed pressure as Musk’s advisers consider using the billionaire’s stock as collateral for new loans to replace Twitter debt.
The revelations over the past few days have raised concerns among shareholders, who have been concerned about Musk’s priorities ever since he took the helm of yet another company.
“The Tesla board is missing in action,” Leo KoGuan, one of Tesla’s largest single shareholders, tweeted Wednesday as he proposed a share buyback. He and another outspoken Tesla investor, Ross Gerber, are calling for the board to add a director to represent private shareholders.
Musk himself has said he has “too much work” on his plate and deals with it by sometimes sleeping in the office. While it has slumbered at Tesla facilities in the past, it has recently been wintering at Twitter’s San Francisco headquarters.
“I continue to oversee both Tesla and SpaceX, but the teams there are so good that often little is needed from me,” Musk tweeted Thursday. “The Tesla team has done incredibly well despite extremely difficult times,” he said earlier in the day, citing the European energy crisis, China’s real estate slowdown and US interest rates as macroeconomic challenges.
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The inconsistent trajectory of late has clouded the end of a year in which Tesla is still expected to post record sales and retain its crown as the world’s largest electric vehicle maker. However, it wasn’t immune to the slowdown in the Chinese auto market and recessionary conditions in Europe. In October, Chief Financial Officer Zachary Kirkhorn said the company expects to fall just short of the 50% growth in vehicle shipments that the company has repeatedly anticipated for several years.
Tesla’s Austin, Texas, plant is scaling slower than expected because a new form of lithium-ion battery cells isn’t ready for mass production yet. Against that backdrop, the company has hired Tom Zhu, a key executive in China who oversaw construction of the Shanghai factory, to oversee operations in Austin, Bloomberg reported on Wednesday.
In Shanghai, Tesla is shortening production shifts 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 not meeting expectations. That comes after Bloomberg reported earlier this week that Tesla planned to cut production on its Model Y and Model 3 production lines in Shanghai by about 20%.
Tesla has a lot to do in 2023. The company recently started deliveries of its long-awaited semi-truck, several years late, and plans to finally start production of its first pickup truck, the Cybertruck.
The buyback demanded by some investors could also be in sight. Musk said during the company’s most recent earnings call that the board believes a buyback generally makes sense and that something in the range of $5 billion to $10 billion 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 official previously said that Bloomberg’s report of plans to cut production in Shanghai was “untrue,” without elaborating.
Tesla shares were down less than 1% at the close in New York, trading lower for the fourth straight day. The stock is down 51% this year.
(Updates with Musk tweet in sixth paragraph, stock closing price in last paragraph)
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