Tesla sends the head of Shanghai and his aides to stimulate American production

SHANGHAI/SAN FRANCISCO, Dec. 21 (Reuters) – The head of Tesla Inc (TSLA.O) in China, Tom Chu, and his reporting team have been brought in to investigate production problems in the United States, sparking discussions among colleagues for whom he is being prepared. A bigger role at a time when CEO Elon Musk was being distracted by Twitter.

Zhu, who heads Tesla’s operations in Asia, was traveling with a team including Shanghai Gigafactory manager Song Gang to Tesla’s factories in California and Texas, where he worked as recently as last week, according to two people familiar with the matter. Both asked not to be named because they are not authorized to speak to the media.

Tesla did not respond to written requests for comment sent by Reuters to its Shanghai accounts and Global Media Relations. Musk did not respond to an email from Reuters seeking comment on the story. Zhou and Song could not be reached for comment.

Under Zhu, Tesla Shanghai has rebounded strongly from lockdowns this year to bring Tesla closer to its 2022 growth goal of 50% production growth. Analysts expect production to drop close to 45%, based on forecasts for the just-ended fourth quarter.

One of the people said Zhou and others made their first trip to the US for Tesla this year in August, at a time when the company was filling some key management roles there.

Among the projects the Shanghai team has been working on is the long-awaited Tesla Cybertruck, its next new model, said a third person.

Tesla’s Austin plant is ramping up production of the Model Y and setup of the Cybertruck. Reuters reports that the Fremont plant is preparing to launch a new version of the Model 3, which will begin production in Shanghai next year.

Some Tesla investors and analysts have expressed concerns about Musk’s distraction after his acquisition of Twitter in October and the depth of the executive platform at the electric car company.

Bloomberg reported this month that Chu was helping to run the Austin plant. However, Zhou’s colleagues in Shanghai believe he is ready for a bigger and broader role at Tesla, the two people said.

A close aide to Zhou in Shanghai has circulated a farewell poem to China’s president in recent weeks on social media, anticipating his new assignment, according to the letter seen by Reuters.

Shanghai team on the road

At the Austin plant, Chinese engineers were seen by people at the plant working in the area designated for Cybertruck and battery development, according to a third person with knowledge of operations there. Tesla has targeted production of the Cybertruck next year.

In Fremont California, Chinese employees have been working on Model Y underbody assemblies, according to another person familiar with their work there.

when Tesla posted a photo on Twitter On Friday in celebration of Austin hitting a new production milestone of 3,000 Model Ys in a week — still less than a third of Shanghai’s weekly production last quarter — Zhu was shown smiling with hundreds of people on the factory floor.

Zhou, who was born in China but now holds a New Zealand passport, is a no-fuss manager who favors Tesla-branded sweaters and lives in a government-subsidised apartment a 10-minute drive from the Shanghai Gigafactory, according to people who work with him and his comments to Chinese media.

Data released later showed that when Musk sent a note in early June warning that he had a “very bad feeling” about the economy, Shanghai was on track to finish the quarter down 36% from the previous quarter due to the COVID lockdown.

With the help of officials in Shanghai, Zhu resumed operations by asking thousands of workers and suppliers to stay in the factory for more than six weeks. Two people familiar with the events told Reuters that Chu himself chose to stay longer, sleeping at the plant as Musk did in 2018 when Fremont was struggling to ramp up production.

Shanghai, a complex that employs about 20,000 workers, bounced back again in the third quarter, with Model Y and Model 3 production up more than 70% from the quarter.

During September, Shanghai accounted for more than half of Tesla’s production.

The plant excelled in applying cost-saving innovations to Tesla’s factory floor, including the use of massive casting machines to streamline production.

“The manufacturing people who have led this push are obvious choices for spreading the production gospel at other new plants,” said Sam Fiorani, who tracks production trends for automated forecasting solutions.

Tesla board member James Murdoch said last month that the company had recently identified a potential successor to Musk without naming the person. Murdoch did not immediately respond to a request for comment.

Reuters has no evidence that Zhou is a likely candidate.

“With Elon Musk’s attention currently being pulled in a number of directions, finding someone to help guide Tesla is important, especially someone with the manufacturing knowledge that Tom Zhu has,” Fiorani said.

Some investors doubt Zhu alone can turn things around: “In America, doing business is very different, very different from running a factory in China,” Ross Gerber, a Tesla investor and CEO of Gerber Kawasaki Wealth and Investment Management, said on Twitter Spaces. Tuesday. “So I think Elon should be in Tesla.”

Additional reporting by Zhang Yan in Shanghai and Hyunju Jin in San Francisco; Editing by Kevin Krolicki and Daniel Flynn

Our Standards: The Thomson Reuters Trust Principles.

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