Bloomberg – While Elon Musk is busy reviewing Twitter Inc. newly acquired (TWTR), Tesla Inc. is facing increasingly pressing problems and testing the faith of some of its CEO’s biggest fans.
Weak demand in China is forcing the electric car maker to slow production and delay hiring at its Shanghai plant. Its top CEO for this market has been called in to help with its new plant, in Texas, which is not growing as planned. and Tesla inventory (TSLA), which has lost more than $500 billion of its market value this year, is under fresh pressure as Musk’s advisors consider using the billionaire’s shares as collateral for new loans to replace Twitter’s debt.
The revelations in recent days have spooked shareholders, already concerned about Musk’s priorities since he took over the helm of another company.
“Tesla’s board of directors is missing,” Liu Kuguan, one of Tesla’s largest individual shareholders, wrote on Twitter Wednesday. With the proposal to buy back shares. KoGuan and Ross Gerber, another outspoken investor in Tesla, are calling for the board to add a director to represent retail shareholders.
Musk himself said he has “a lot of work” and sometimes sleeps in the office. While he previously slept in a Tesla facility, he recently went into a hibernation at Twitter’s headquarters in San Francisco.
“I still supervise Tesla and SpaceX, but the teams are so good they often need me for a bit,” Musk tweeted Thursday. “The Tesla team has done incredibly well, despite very difficult times,” he said earlier in the day. They cite the European energy crisis, the collapse of China’s real estate sector and US interest rates as macroeconomic challenges.
The latest choppy stretch into the clouds marks the end of the year in which Tesla is still expected to post record sales and retain its title as the world’s largest electric vehicle maker. However, it was not immune from the slowdown in the Chinese auto market and the slump in Europe. In October, Zachary Kirkhorn, Tesla’s chief financial officer, said the company expected to miss out on the 50% growth in vehicle deliveries it had predicted repeatedly for several years.
Tesla’s factory in Austin, Texas, is growing more slowly than expected because a new type of lithium-ion battery is not yet ready for mass production. Against that backdrop, the company has appointed Tom Chu, the chief executive in China who oversaw the construction of the Shanghai plant, to oversee operations in Austin, Bloomberg reported Wednesday.
Tesla is shortening production shifts in Shanghai and delaying start dates for some newly hired employees, Bloomberg reported Thursday, the latest signs that demand for Tesla electric cars in China is not meeting expectations. It came after Bloomberg reported earlier this week that Tesla plans to cut production at its Model Y and Model 3 production lines in Shanghai by about 20%.
Tesla will have a lot to do in 2023. The company has just begun delivering its long-awaited semi-truck after several years and plans to finally begin production of its first truck, the Cybertruck.
The buyback some investors have called for may also be on the table. Musk said during the company’s recent earnings call that the board generally believes a buyback makes sense, and that something in the range of $5 billion to $10 billion was possible. Last month, he wrote on Twitter that the decision would be up to Tesla managers.
Musk and Tesla did not respond to requests for comment Thursday. A company representative said earlier that the Bloomberg report Plans to cut production in Shanghai were “wrong”, without elaborating.
Tesla shares fell less than 1% at the close in New York, trading lower for the fourth day in a row. The value is down 51% this year.
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