Musk Takes Over Tesla Sales Amid 12% Delivery Decline

Elon Musk, the Chief Executive Officer of Tesla Inc., has taken over the oversight of the company's sales operations in Europe and the U.S. following the departure of Omead Afshar, who had been responsible for these regions. This change comes as Tesla faces declining vehicle deliveries, with analysts estimating around 389,400 vehicles delivered in the three months ending in June, marking a roughly 12% decrease from the previous year. This decline follows a 13% drop in the first quarter, indicating a challenging period for the electric vehicle (EV) maker.

Musk's decision to take on this additional responsibility is significant, given his extensive involvement in multiple companies, including SpaceX, X, xAI, The Boring Company, and Neuralink. However, he is not taking on all of Afshar's responsibilities, as manufacturing in these regions will continue to be overseen by Tom Zhu. Zhu, who has been a key figure in Tesla's operations in China, has been instrumental in the success of Gigafactory Shanghai. Despite his success in China, Zhu has recently faced challenges with sales in the region, which are down by 22,000 units year-to-date compared to last year.

Musk's focus on Europe is noteworthy, considering he has previously called the region Tesla’s weakest market. The company’s new-vehicle registrations across Europe fell 28% in May and plunged 37% through the first five months of the year, as Chinese electric-car makers led by BYD Co. gained ground. Musk's controversial statements and political involvement have also contributed to Tesla’s demand issues, with polls finding him viewed negatively in major electric car markets, including Germany and the UK. His endorsement of far-right parties and candidates in Europe has spurred protests and acts of vandalism in France, Italy, and elsewhere.

With Zhu now responsible for manufacturing globally, his direct reports include Hrushi Sagar, who oversees Tesla’s factory in Fremont, California, and Jason Shawhan, who oversees its plant in Austin. Troy Jones remains the vice president of North America sales and now reports to Musk. It’s unclear if the revised management structure is permanent or if reporting lines could still change. Zhu joined Tesla in April 2014 and quickly rose through the ranks, leading the construction and opening of the company’s first overseas factory in Shanghai as vice president of Greater China. In April 2023, he was promoted to senior vice president of automotive operations, expanding his remit to global production, sales, deliveries, and service, and moving to the U.S. However, he was sent back to China and returned to a more regional role last year, after Tesla encountered a number of technological and regulatory obstacles related to launching its advanced driver-assistance features.

Tesla's factories are currently operating at about 50% capacity due to demand issues, a stark contrast to the production-constrained days of the past. The move to have Musk oversee sales in Europe and the U.S. suggests a shift in Tesla's strategy, as the company seeks to address its declining sales. However, some analysts have expressed concerns about Musk's approach to management, citing his tendency to set unrealistic goals and apply pressure on staff. This approach has reportedly led to high turnover and data falsification in the past. It remains to be seen whether Musk's direct involvement in sales will help Tesla overcome its current challenges.