Tesla's Management Saga

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Mar 16, 2015
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Tesla Motors (TSLA, Financial) has recorded a 3% drop in share value as the electric car maker reported a reshuffling and organization of their sales team. Last week, Tesla CEO Elon Musk was reported to be getting ready to let go a few of Tesla’s international executives after sales in China deteriorated. Interviews for executives to lead the various regional markets and operations will commence soon.

Tesla’s global sales chief Jerome Guillen will also be reassigned to a different role once appointment of new executives in North America, Europe and Asia-Pacific has been taken care of. “We are interviewing candidates for those roles and expect to bring them on board later this year,” said Tesla in a press release. Tesla also stated “Jerome has not been demoted in any way. He has been and remains part of the senior executive team, reporting directly to Elon.”

This managerial reshuffle takes place post company earnings widely missing Wall Street expectations. In the fourth quarter, Tesla reported net losses of $108 million, translating to 86 cents a share, on revenue of $956.7 million. A year prior, Tesla reported a $294.04 million loss or $2.36 per share with sales reaching $3.2 billion.

Tesla recorded a loss of 13 cents per share, falling short of analysts’ expectations by a considerable margin. In the last quarter, the car company built 11,627 cars but failed in delivery of as many cars as it said it would, falling short by nearly 2,000 cars in the quarter.

Tesla, the world’s youngest publicly traded American car manufacturer, reported 0.9% drop in shares to $189.28 as of 9:30 am EST on March 10.

Growth Targets

Tesla has reported plans to deliver 55,000 cars in 2015, an increase in numbers from the 31,655 sold in 2014. America’s youngest publicly traded auto maker claimed around 1,400 units slipped from December to the first quarter due to shipping issues, the winter weather and the customers’ holiday travel plans. Guillen was previously employed with Daimler AG (DDAIF, Financial) and got promoted to VP, global sales and service in April 2013 with Tesla.

According to Tesla CEO Elon Musk, Jerome Guillen began his Tesla stint as the Model S program manager at a time when the company was suffering from their service capability. Elon Musk was impressed with Guillen and had asked him to make the switch to running Tesla’s service sector and later he was asked to take charge of sales.

Complaints from a few Model S customers who bought their cars before the launch of the ‘D’ version about not getting features like all-wheel drive and driver assistance features played havoc on the auto makers’ reputation.

Key areas of Tesla’s sales

Traditionally, Tesla has recorded its highest sales figures in California. Last year, however California’s sales dropped 27% to 6110 cars, according to the California New Car Dealers Association. In terms of global sales, Tesla recorded 55% of its total sales in North America, 15% in Asia and 30% in Europe.

Musk feels his Chinese sales team is to blame for the weak numbers recorded in China. His sales team felt it is difficult to charge a car in China, which Musk does not agree with at all.

Analysis

Until the electric car revolution really picks up in the APAC market, analysts have assigned TESLA a ‘hold’ recommendation. True potential for the car company is yet to be reached. With the new management coming into place, one needs to sit back and see the growth figures projected and reached.