Tesla’s problems are piling up while Elon Musk is distracted on Twitter

(Bloomberg) — While Elon Musk is busy fixing Twitter Inc. Newly acquired Tesla Inc. Increasingly pressing issues are testing the faith of some of its CEO’s biggest admirers.

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Weak demand in China is forcing the electric car maker to slow production and delay hiring at its Shanghai plant. Its top CEO for this market has been called in to help with its newest plant, in Texas, which hasn’t ramped up as planned. Tesla stock, which has lost more than $500 billion of its market value this year, is under renewed pressure as Musk’s advisors consider using the billionaire’s shares as collateral for new loans to replace Twitter debt.

The revelations in the past few days have spooked shareholders already worried about Musk’s priorities since he took over the helm of another company.

“Tesla’s board of directors is missing in action,” Liu Koguan, one of Tesla’s largest individual shareholders, tweeted on Wednesday as he proposed a stock buyback. He and another outspoken Tesla investor, Ross Gerber, have called on the board to add a director who will represent retail shareholders.

Musk himself has said he has “a lot of work” on his plate, which he deals with by occasionally sleeping in the office. While in the past he slept in Tesla facilities, he recently went into a hibernation at Twitter headquarters in San Francisco.

“I still oversee both Tesla and SpaceX, but the teams there are so good that I often need a little,” Musk tweeted Thursday. “The Tesla team has done incredibly well, despite very difficult times,” he said earlier in the day, pointing to the European energy crisis, China’s real estate slump, and US interest rates as macroeconomic challenges.

The latest choppy stretch sours the end of a year in which Tesla is still expected to post record sales and retain its crown as the world’s largest electric vehicle maker. However, it was not immune to the slowdown in the auto market in China and recessionary conditions in Europe. In October, Chief Financial Officer Zachary Kirkhorn said the company expects growth to be just under the 50% growth in vehicle deliveries that the company has repeatedly said it expects over several years.

Tesla’s factory in Austin, Texas, is expanding slower than expected, with a new form of lithium-ion battery cell not yet ready for volume production. Against that backdrop, the company tapped Tom Chu, a key China executive who oversaw construction of the Shanghai plant, to oversee operations in Austin, Bloomberg reported Wednesday.

In Shanghai, Tesla is shortening production shifts and delaying start dates for some newly hired employees, Bloomberg reported Thursday, the latest indications that demand for Tesla EVs in China is not meeting expectations. It came after Bloomberg reported earlier this week that Tesla plans to cut production on its Model Y and Model 3 production lines in Shanghai by about 20%.

Tesla will have a lot going for it in 2023. The company recently started delivering its long-awaited semi-truck several years late and plans to finally begin production of its first pickup, the Cybertruck.

The buyback some investors are calling for may also be on the table. Musk said during the company’s recent earnings call that the board generally believes a buyback makes sense, and that something in the range of $5 billion to $10 billion was possible. Last month, he wrote on Twitter that the decision would be up to Tesla managers.

Musk and Tesla did not respond to Thursday’s requests for comment. A company representative said earlier that a Bloomberg report on plans to cut production in Shanghai was “incorrect,” without elaborating.

Tesla shares fell less than 1% at the close in New York, trading lower for the fourth straight day. The stock is down 51% this year.

(Updates with Musk’s tweet in sixth paragraph, closing stock price in last paragraph)

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