Tesla Terminates 30 Percent of Employees in China

Mar 16, 2015 12:06 PM EDT | Matt Mercuro

Tesla Motors will terminate approximately 30 percent of its employees in China as the Model S automaker looks to bounce back from slow sales in the most important auto market in the world.

About 180 of its 600 employees will be let go as part of Tesla's restructuring plan after missing sales targets in China, according to a report by the Economic Observer newspaper.

Tesla hasn't commented on the job cuts officially yet, but the Observer claims the layoffs mainly affect the sales and service personnel teams and have already started.

Layoffs could affect close to 200 people when all is said and done.

"Layoff is not just the sales department. In addition to providing technical support department, other departments have layoffs, layoffs proportion is higher than 30 percent on average, could eventually cut nearly 200 people," a Tesla China "informed source" confirmed to the Economic Observer.

The Model S went on sale in China in 2013 for $115,000. Since being released that summer sales targets have not lived up to expectations and it is clear company CEO Elon Musk is not afraid to let people go to change the company for the better.

"The purpose is to better respond to the Chinese market," Gary Tao, a local spokesman for the carmaker, said to Bloomberg. "The team remains stable and strong."

Tesla promoted Xiaotong Zhu recently to general manager in China to "create a more efficient team," according to the newspaper. He did not initiate the massive layoffs however, they were a "direct order" from Tesla Global CEO Andy Herron.

Tesla is hoping to sell 500,000 vehicles a year by 2025 and it wants to make a factory in China by 2020.  The automaker delivered approximately 9,834 vehicles during the fourth quarter and manufactured approximately 11,627.

Production delays for the P85D version of the Model S pushed back some deliveries to the first quarter of 2015.

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