Tesla sends Shanghai boss and aides to start American production

SHANGHAI/SAN FRANCISCO, Dec 21 (Reuters) – Tesla Inc’s ( TSLA.O ) China chief Tom Zhu and a team of his reports have been brought in to troubleshoot manufacturing problems in the United States, fueling talk among colleagues he is groomed for a bigger role at a time when CEO Elon Musk has been distracted by Twitter.

Zhu, who heads Tesla’s Asia operations, has traveled with a team including Shanghai gigafactory manager Song Gang to Tesla’s plants in California and Texas and was there as recently as last week, according to two people with knowledge of the matter. Both asked not to be named because they were not authorized to speak to the media.

Tesla did not respond to written requests for comment from Reuters sent to its Shanghai accounts and global media relations. Musk did not respond to an email from Reuters seeking comment for the story. Zhu and Song could not be reached for comment.

Under Zhu, Tesla Shanghai rebounded strongly from shutdowns this year to bring Tesla close to its 2022 growth target of 50% production growth. Analysts expect production to fall short by close to 45%, based on forecasts for the just-ending fourth quarter.

Zhu and others made their first trip to the United States for Tesla this year in August, one of the people said, at a time when the company has some key leadership roles there unfilled.

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

Tesla’s Austin plant ramps up Model Y production and prepares the Cybertruck. The Fremont plant is preparing to launch a new version of the Model 3, which will begin production in Shanghai next year, Reuters has reported.

Some Tesla investors and analysts have expressed concern about Musk’s distraction following the acquisition of Twitter in October and the depth of the executive bench at the electric car company.

Bloomberg reported this month that Zhu helped run the Austin facility. However, Zhu’s colleagues in Shanghai believe he is in line for a more senior and broader role at Tesla, the two people said.

A close aide to Zhu in Shanghai circulated a farewell poem to the China chief in recent weeks on social media, in anticipation of his new assignment, according to the message reviewed by Reuters.

SHANGHAI TEAM ON THE ROAD

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

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

When Tesla posted a photo on Twitter on Friday to celebrate Austin reaching a new production milestone of 3,000 Model Ys in a week — still less than a third of the weekly output in Shanghai last quarter — Zhu was shown smiling with hundreds of people on the factory floor.

Zhu, who was born in China but now holds a New Zealand passport, is a no-nonsense manager who prefers Tesla-branded fleece jackets and lives in a government-subsidized apartment a 10-minute drive from the Shanghai Gigafactory, according to people who work with him and his comments to Chinese media.

When Musk sent a memo in early June warning that he had a “super bad feeling” about the economy, Shanghai was on track to end the quarter down 36% from the previous quarter due to COVID shutdowns, data released showed later.

With the help of Shanghai officials, Zhu restarted operations by asking thousands of workers and suppliers to stay at the factory for more than six weeks. Zhu himself chose to stay longer, sleeping at the factory as Musk had in 2018 as Fremont struggled to ramp up production, two people with knowledge of the events told Reuters.

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

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

The facility has excelled at using cost-saving innovations on the factory floor for Tesla, including the use of massive casting machines to simplify production.

“The manufacturing people who led that push are obvious choices to spread the manufacturing gospel to the other new factories,” said Sam Fiorani, who tracks manufacturing trends at Auto Forecast 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 Zhu is the possible candidate.

“With Elon Musk’s attention currently being pulled in a number of directions, it’s important to find someone to help Tesla, especially someone with the manufacturing know-how that Tom Zhu has,” Fiorani said.

Some investors are skeptical that Zhu alone can turn things around: “Doing business in America is very, very different than running a factory in China,” said Ross Gerber, a Tesla investor and managing director of Gerber Kawasaki Wealth and Investment Management on Twitter Spaces on Tuesday. “So I think Elon has to be in Tesla.”

Reporting by Zhang Yan in Shanghai and Hyunjoo Jin in San Francisco; editing by Kevin Krolicki and Daniel Flynn

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