According to Reuters, CEO Elon Musk sent out an email to top overseas executives after selling just 120 cars in China last month.
Sources who have seen the email said that Musk is prepared to fire or demote managers if they are “not on a clear path to positive long-term cash flow.” Musk has ambitious plans for global expansion and last month’s Chinese sales figures fall way short of Tesla’s targets, according to one of the sources.
The internal email was sent out in late January, and Musk was reportedly very clear in his expectations. Last year Tesla confirmed that two of its top managers in China had left the company. The company would not comment on the latest revelations on Tuesday.
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Disappointing results in growth market
Musk considers China to be an important growth market for Tesla, and he spoke about the company’s business in the country at the Detroit Auto Show in January. He told journalists that although Chinese consumers were initially confused by how the cars and the charging network worked, the situation had now improved.
Tesla continues to expand its Supercharger network in China, and the Tesla Model S sedan has been on sale in the country since last year. The company is scheduled to report its Q4 2014 earnings on Wednesday, with analysts expecting the company to report lower than predicted delivery figures.
Earnings report on Wednesday
Musk has moved to end concerns that lower delivery figures mean decreasing demand for the cars, perhaps linked to the global decline in oil prices. He claims that demand remains strong but the company can only produce a limited number of vehicles.
Analysts and shareholders are eagerly awaiting tomorrow’s results, which could inform them if, and by how far, Tesla is falling behind on its expansion plans. Company share prices were also hit recently by delays to the release of the Model X SUV, which are thought to have been caused by the falcon-wing doors among other factors.