Tesla Trims Staff In China On Low Sales

In January Elon Musk was blunt when he said that Chinese sales of the Tesla Model S weren’t living up to expectations, but he seemed bullish on the automaker’s ability to turn things around. Yet two months later, the Wall St. Journal reports that Tesla is cutting some 180 jobs from its Chinese staff, as the electric automaker pares down on lower-than-expected sales. I guess Musk kept his promise.

Tesla launched in China last year, and Musk had commented that if the automaker sells 5,000 cars in 2014 in the quasi-communist state, he’d consider their first year there a success. Unfortunately, Tesla sold less than half that number, and 2015 sales are off to a similarly slow start, though that can be blamed (at least in part) on Tesla’s slow logistics. Just ten Teslas were imported to China in January, though that’s hardly indicative of monthly sales, which are usually between 400 and 500 units.

Despite promising free home charging stations for Model S buyers, and pledging to install a more comprehensive charging network, Tesla is still fighting perceptions that charging an electric car is too difficult in many parts of China right now. It also doesn’t help that Tesla was left out of the first round of EV incentives China showered on local automakers, though I doubt it would have made much of a difference to the 180 former Tesla employees. Tesla has, however, doubled its global workforce in the past year to over 10,000 employees, so while this minor layoff is a major deal for a select few, in the grand scheme of things it’s barely a blip on the employment radar.

It wasn’t just low-level peons that have faced the axe though; Tesla has gone through two different leadership changes in China in the last year alone, making it seem like the automaker has faced issues from day one. The Tesla CEO may have to eat his words when it comes to promising a new factory in the Peoples Republic. For his part, Musk remains certain that Tesla can hit its production goals even without Chinese sales, but the bears on Wall St. are already circling the sinking TSLA stock price.