Electric car company Tesla is looking to open a new factory in Shanghai, according to reports by the Wall Street Journal.
Earlier this year, the company reported it was in talks with the Shanghai government about opening a facility there in order to grow its market share in the country.
This makes sense considering China is home to the most electric passenger vehicles in the world. It registered up to 325,000 new electric vehicles (EV) in 2016.
However, it looks like Tesla has more issues than just negotiating China’s 25 percent import tariff. The company has been dogged by its fair share of problems over the past weeks.
What’s going on at Tesla?
1. Problems with the Model 3
When the company launched its much-anticipated Model 3 car in July, it began production two weeks ahead of schedule. The company’s founder and chief executive, Elon Musk, used this opportunity to proclaim that production will quickly ramp up. He said production will go from 100 in August, to 20,000 in December.
However, that does not seem to have happened.
Last week, JP Morgan slashes its fourth-quarter forecast for the EV company because it doesn’t think it can handle this output. This comes after news that Tesla had only delivered 220 Model 3 cars, down from the 1,260 that Wall Street expected.
Ryan Brinkman, automotive equity research analyst at the firm, wrote in a note to investors:
“We worry that if the vehicle proves structurally more expensive to manufacture, that in order to preserve the targeted gross margin, Tesla may need to increase the price of the vehicle to consumers, with negative implications for demand.”
2. Problems with staff
As well as issues with the Model 3 production, it looks like Tesla is having staffing issues. The company has reportedly dismissed more than 700 staff, around two percent of its entire workforce. It is thought the affected staff were mainly from the motor production side of the business.
Some of the terminated employees told CNBC that they were laid off “without warning” by email or a phone call.
It is thought the terminations were a “cost-cutting exercise”.
3. Problems with the truck
As well as cars, Tesla is working on building an all-electric semi-truck. Musk has been tweeting about the truck for a few months now and had said it would be unveiled in September.
“Team has done an amazing job. Seriously next level,” he said.
However, the September unveiling of the semi-truck did not come to pass, and the event was pushed back to October, actually later this week. Even then, Musk didn’t sound so sure himself. His later tweets discussing the new date mentioned that the unveiling was “tentatively scheduled” for October.
Why is Tesla having these problems?
Tesla is a very interesting company and its charismatic leader, Musk, has some really interesting ideas. Maybe Musk’s problem is that he has spread himself too thinly. One moment he’s announcing a neural lace company, the next it’s his plans for Mars, or the semi-truck, or a boring tunnel company, or getting back into the Hyperloop race, or solving energy problems in Puerto Rico and Australia.
It appears the cars get left on the backburner.
Yet, Tesla became the most valuable car company in the US earlier this year, overtaking legacy companies like General Motors. If Tesla wants to remain in this position, something needs to change.