Tesla CEO threatens firings after dismal China sales

Tesla Motors Inc Chief Executive Elon Musk pauses during a news conference in Tokyo, September 8, 2014. [Photo/Agencies]

Tesla Motors Inc Chief Executive Elon Musk is prepared to fire overseas executives, people with knowledge of the matter said, after weak Chinese sales of the company's luxury electric cars cast doubt on his ambitious global expansion plans.

Tesla sold about 120 cars in China last month, one of the sources told Reuters, well below the company's aggressive targets. Musk has previously said he expected China sales could rival those in the United States as early as 2015.

Two top China managers left the company in 2014, Tesla said last year. Musk indicated other country managers who are not meeting targets may lose their jobs, the sources said.

The persons, who spoke to Reuters over the past two weeks, were not willing to talk for attribution because of the sensitivity of the matter.

Tesla shares slumped 7 percent on Jan 13 after Musk said China sales were "unexpectedly weak" during the fourth quarter. "We'll fix the China issue and be in pretty good shape probably in the middle of the year," Musk added at the time.

He was more blunt in an internal email to managers in late January, threatening to fire or demote country managers if they are "not on a clear path to positive long-term cash flow," according to two people who have seen the email.

Reuters did not view the original email, but was provided with a written transcript of several key passages by one of the sources. A second source confirmed the authenticity of the email.

Tesla did not have an immediate comment on Tuesday.

While Tesla sales in many overseas markets from Europe to Asia have not met expectations - and executives have subsequently been fired or demoted - results have fallen far short in China, a key market for Musk's expansion strategy.

Musk has said Tesla plans to boost annual production from a projected 50,000 cars this year to 500,000 by 2020, with the United States and China as the company's two largest markets. In January, Musk made an even more bullish projection that production would reach "a few million" cars a year by 2025.