Rumors about the promotion of Tesla China boss Tom Zhu proved mostly true. Although he has not replaced Musk as Tesla’s CEO just yet, Zhu will take direct oversight of the electric carmaker’s U.S. assembly plants and sales operations in North America and Europe. This makes him second-in-command at Tesla.
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A month ago, the Chinese media claimed that Tesla China’s boss Tom Zhu was set to replace Elon Musk as Tesla’s CEO. As incredible as it seemed at the time, the information was not entirely meritless. Especially after the acquisition of Twitter, Musk appeared to lose sight of Tesla, dedicating his entire time to managing Twitter and engaging with fans on social media. As such, Tesla needed a firm hand on the helm, and Musk indicated more than once that he does not necessarily like the CEO role he assumed long ago.

Almost immediately after the rumors started circulating, we discovered that Zhu had flown to the U.S. According to a Bloomberg report, Zhu and a team of engineers were brought in to oversee the production ramp-up at Giga Texas. Despite that, the Chinese media was still adamant that Zhu had more coming his way besides overseeing a small factory in the U.S. After all, he had already done that at Giga Shanghai, turning it into Tesla’s main production hub.

It appears that Tom Zhu was indeed groomed for a bigger role. A new organizational chart posted internally at Tesla and seen by Reuters confirms that Tom Zhu is now the highest-profile executive after CEO Elon Musk. The Chinese national will directly oversee Tesla’s assembly plants and sales operations in North America and Europe. At the same time, Musk will keep oversight of vehicle design and development, in which he has been deeply involved.

Previously, we’ve had conflicting information about Tom Zhu’s roles at Tesla China following the reshuffling. More specifically, Zhu was no longer Tesla China’s legal representative, although he appeared to remain Tesla China’s chairman. The new organizational chart, confirmed by Reuters with two people who had seen it, shows that both are true. Zhu remains the vice president of Greater China, and he also retained his responsibilities as Tesla’s most senior executive for sales in the rest of Asia.

The new report confirms that Zhu is probably set to be named Tesla’s CEO at some point, although this might take a while. Under the new assignment, Tesla managers reporting to Zhu include Jason Shawan, director of manufacturing at the Gigafactory in Texas, Hrushikesh Sagar, senior director of manufacturing at Tesla’s Fremont factory, Joe Ward, vice president in charge of Europe, the Middle East, and Africa, and Troy Jones, vice president of North America sales and service. Tesla country managers in China, Japan, Australia, and New Zealand will continue to report to Zhu under the new organizational chart.

It was a topsy-turvy year for Elon Musk and Tesla in 2022, and the the New Year has started in a similar fashion in terms of a good news-bad news ratio.
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The most recent news came out of Seoul, South Korea, where government antitrust regulators hit the electric vehicle manufacturer with a $2.2 million (2.85 billion won) fine for failing to disclose the impact colder temperatures would have on the driving range of its vehicles.

The Korea Fair Trade Commission (KFTC) went as far as to say that Tesla exaggerated the "driving ranges of its cars on a single charge, their fuel cost-effectiveness compared to gasoline vehicles as well as the performance of its Superchargers."

Readers of autoevolution will recall an article posted on December 15, where we summarized a study by Recurrent that showed electric vehicle range in colder temperatures can dip by as much as 30%. The four models of Tesla on the road averaged a 16.5% loss in range, led by the Model S with a 19% reduction in range.

in 2021, the South Korean consumer group Citizens United for Consumer Sovereignty stated most EVs experience range drops by as much as 40% in cold temperatures, with Tesla models being the most impacted.

This is not the first time the KFTC has fined an automaker. Mercedes-Benz was fined $15.6 million dollars (20.2 billion won) for false advertising regarding emissions of its diesel passenger vehicles.

While the second half of 2022 sales numbers in South Korea have not been posted, the first half of the year Tesla sales in the Asian country were certainly forgettable. The company managed to sell only 6,746 vehicles in the January through June period, down 31% from 2021. In fact, in July, Tesla did not record any sales in Korea as it stated shipments that arrive every three or four months were sold out for the next two shipments, according to Business Korea.

The decline was thought to be caused by several factors including a price hike and an increase in competition from the likes of BYD in neighboring China.

The fine comes as range and charge anxiety remain the biggest concerns among prospective electric vehicle buyers. News of the significant drop in range during winter months certainly will not help.

All was not bad news regarding South Korea. In November, Elon Musk suggested after a meeting with South Korean president Yoon Suk Yeol, that the company's second factory in Asia could be placed in South Korea. A decision on the next Gigafactory was expected by the end of the year, but never materialized.

Musk also expressed a willingness to develop the country's charging infrastructure and expand supply chain cooperation with Korean companies. It remains to be seen how the New Year fine will impact the company's decision.

In January 2022, Elon Musk said Tesla would grow 50% that year and would repeat that percentage annually. After it released Q4 2022 results, we can say that’s another target the CEO set for his company and missed. Unlike robotaxis, Tesla was pretty close to reaching this goal: it delivered 40.34% more than in 2021. Analysts bet on much higher numbers.
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FactSet compiles financial analysts' guesses. According to CNBC, they were between 409,000 and 433,000 units. Troy Teslike tweeted that analysts were estimating 417,957 deliveries. The actual number was inferior to all these estimates: 405,278 EVs met their owners in Q4 2022. Ironically, Tesla never delivered so many cars in a single quarter. The issue here is that people expected more, which is always bad news.

Interestingly, production was much higher than that: 439,701 cars. In a year-over-year comparison, that led to 1,369,611 units. When we learn that the total production number in 2021 was 930,422 EVs, that's a 47.2% increase, which suggests that Tesla produced more cars than it could sell.

In 2021, Tesla delivered 936,222 cars, or 5,800 EVs more than it manufactured that year. In 2022, it handed 1,313,851 vehicles, which created a stock of 55,760 units. It is not a surprise that the company’s backlog is dropping at an accelerated pace.

Tesla is trying to improve it in several ways. In China, it replaced the government subsidy for discounts on insurance and transportation costs. In the U.S., the EV maker is allegedly developing cheaper versions of its cars. That may make them eligible for the new $7,500 federal tax credit established by the Inflation Reduction Act.

Deliveries may also have been lower than production because several Tesla customers refuse to take delivery of their cars due to defects. Tesla never disclosed the percentage of vehicles customers reject, but that would be an interesting indicator of how much money the company could save with better quality control.

A while ago, some people could oversee these flaws to be able to resell the cars at prices higher than those Tesla was selling them for. The demand drop affected these business opportunities and made the products of the EV maker depreciate more than other used cars. Anyone getting them will lose money, as all new-car buyers do. Depending on how many repairs these vehicles will have to face – and how serious they are – they may depreciate even more. In Germany, Tesla allegedly delivered new cars with cracked jacking points at least twice.

Tesla has two new factories still gaining speed to produce vehicles people are not so thrilled anymore to buy. That may create a repetition in Q1 2023, with amazing production numbers and frustrating delivery figures, forcing Tesla to renovate its lineup or adjust manufacturing capacity. Next March 1, 2023, Tesla will hold its 2023 Investor Day to discuss “long-term expansion plans, generation 3 platform, capital allocation, and other subjects.” Some investors may use the opportunity to ask Musk why the company’s shares depreciated 69% in the last 12 months.

Elon Musk said Tesla would grow 50% every year but delivered only 40% more EVs in 2022 than in 2021. BYD did not set targets – at least that we are aware of – but handed 184% more BEVs to customers last year than in 2021. And the comparison can be even worse for the American EV maker if you also count plug-in hybrid electric vehicles (PHEVs).
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In China, battery electric vehicles (BEVs) and PHEVs fit the same classification: new energy vehicles (NEVs). In 2021, BYD sold 593,745 units of these products, jumping to 1,868,543 last year – a 214.7% increase. In other words, the Chinese manufacturer more than doubled its BEV and PHEV production.

At this pace, BYD will beat Tesla in 2023 as the largest BEV maker in the world. For those who count PHEVs, that already happened in 2022, but the fact is that BYD lagged Tesla by 402,711 vehicles: the American EV maker sold 1,313,851 EVs, while the Chinese carmaker achieved 911,140 units. In 2021, Tesla sold 936,222 units – or a bit more than BYD did in 2022. In the same year, the Chinese manufacturer handed 320,810 BEVs. Unfortunately for Tesla, BYD should accelerate even more in 2023.

The Chinese carmaker is aggressively expanding into new markets. In those countries where it already sells its cars, the plan is to have more dealers. BYD is also opening new factories, planning to present new vehicles and even new brands. On January 5, we will see the first one from Yangwang. Meanwhile, Tesla sells four EVs, the same ones it had sold since March 2020, when it started delivering the first units of the Model Y.

If BYD improves its results in its home market alone, that will already represent a massive boost. After all, China is the country that buys more vehicles globally. That is what should happen if we check what the automaker managed to do in December alone.

With 235,197 NEVs sold, it broke another monthly record, something it has been doing non-stop since February 2022. Talking about the past months, the company has been selling more than 200,000 NEVs since September. The December result is 2.1% higher than its sales in November.

When we talk only about BEVs, they represented 111,939 units in December. Tesla does not disclose its monthly sales numbers, but all we have to do is divide the 405,278 EVs delivered in Q4 2022 to have the average per month: 135,092 cars. That shows how close BYD is to claim the title of largest BEV maker worldwide. Either the American EV maker becomes more competitive, or it will soon lose the title of largest BEV manufacturer worldwide, which should also have immediate effects on share prices.

On December 29, we told our readers that Tesla was using bad weather as an excuse to backtrack its promises of a $7,500 discount and 10,000 miles of free Supercharging for everyone who bought their EVs until December 31. GJK started a thread on a Facebook group to discuss that and discovered other people going through the same issues. Tesla eventually honored its promises to her, but it took work for this customer.
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GJK was left with very few options, all of them pretty lousy ones. The first one was to simply cancel her order even after she had fully paid for the car. That would make her lose $250 (a cancelation fee) and $628 (the deposit and a wall charger she would not use if she didn’t get the Model Y she ordered). The alternative was to keep her purchase, receive the car in 2023, and have nothing that Tesla promised she would get. That was not an option: she only bought the EV at that moment because of the advantages she would have.

She decided to work with a third option: if Tesla was unable to honor what it had offered her, it was also not her fault. In fact, Tesla was the one responsible for delivering her the car in the conditions it said it would. That said, it was also up to Tesla to give her a full refund – without the cancelation fee and giving back everything else GJK paid for. The delivery took place at the Colorado Tesla Service Center where it was supposed to happen when it was scheduled to occur: December 31.

This argument seems to have worked. GJK said she had to endure “lots of phone calls and text messages” when politely answering someone who said she was screwed. That was just an example of a lot of abuse she endured from more than enough Tesla advocates. One of these guys said she was in a white-hot rage, but that she was to blame after ordering the car so late (on December 23). According to him, that was more than expected for everyone that had to wait months for their Teslas. This person missed the memo on demand drop and lower used Tesla prices, but she was elegant enough to say Tesla did what it promised – on short notice, which he deemed almost impossible. If it were, Tesla should have refused to take her money for the EV in the first place.

This was just an example of several others in the thread she opened. It was wise of her to just let some of these guys talk to themselves and get embarrassed in the end. She also defended the company from people apparently attacking Tesla. As GJK said, she just wanted the EV maker to honor the deal it had with her.

Unfortunately, that was not the case for several other people facing the same delivery delays she experienced. Most kept their faith that a miracle could happen at the last minute, but they did not write about that anymore, which suggests they missed the discount and the $7,500. We’d like to think that our article helped, but that would not be a true win with so many people missing what they were told they would get. At least GJK got what she wanted. Let’s hope her story does not get bitter due to the several flaws Tesla vehicles present: her Model Y may be an exception.

Tesla is clearly facing a demand problem in its two major markets: the U.S. and China. Disappointing sales numbers in Q4 2022 and also in December alone led to something Tesla denied it would do again in China: reduce prices. It had already done that twice to increase sales, but it did not work. Now, a Model Y can be up to 42.7% more affordable than it is for the American customers.
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It is true that Tesla sells a rear-wheel-drive version of the Model Y in China and has no such option in the U.S. Despite that, the entry-level Model Y costs RMB259,900, equivalent to $37,765 at the current exchange rate. The cheapest Model Y Americans can buy is the Dual Motor All-Wheel-Drive, which starts at $65,990 in the U.S. The $28,225 difference represents 42.7% of the American price tag for this EV. If we use the Chinese vehicle as a reference, that’s 74.7% more than Chinese customers buy for the most affordable Model Y available in their country.

We can also compare the Model Y single motor rear-wheel-drive to the Model 3 that Tesla sells in the U.S. with the same spec for $46,990. In that case, the Chinese Model Y is 19.6% cheaper than the American Model 3. If you invert the comparison, the electric sedan sold in the U.S. is 24.4% more expensive than the Chinese electric SUV.

Anyway, we’d better compare the entry-level Model Y sold to American customers to its true equivalent in China. The Model Y Dual Motor All-Wheel-Drive costs RMB309,900 ($45,031) in China, which is also cheaper than the most affordable Model 3 customers can buy from Tesla in the U.S. The price difference from the same spec in the U.S. is $20,959, which represents 46.5% of the price of the Chinese vehicle and 31.8% of the American price tag for this EV.

Tesla reduced prices in China in the past in an attempt to make its vehicles fit the government incentive for EVs. They had to cost less than RMB300,000, but the financial aid is no longer valid. Despite that, electric cars in China still can get free or cheaper license plates in crowded megalopolises such as Shanghai. Tesla is probably trying to convince these customers to choose its vehicles instead of those from the competition.

It will not be easy. Tesla only has four vehicles in its lineup, and they are already considered old. The most recent EV from the brand – the Model Y – should receive a midcycle refresh in 2023. Yet, the vehicle that the company confirmed it would try to renew is the Model 3.

In December, Tesla sold 55,796 EVs in China. BYD sold 111,939 units, more than the American EV maker managed to deliver in November in China: 100,291 units. BYD has recently increased prices for its EVs.

Compared to what Tesla sold in December 2021, that result is still a setback: the EV maker sold 70,847 vehicles one year ago.

For a company that would present 50% better results yearly, regardless of what it achieved before, that’s concerning. Unfortunately for Tesla, reducing prices does not seem enough to revert the demand drop.

As part of the phasing in of the new tax-and-climate law, Section 25E of the tax code was amended to include an allowance of a credit for a qualified buyer purchasing a used EV from a dealer to be eligible for a credit equal to the lesser of $4,000 or 30% of the sales price.The revenue procedure helps clarify several terms set in the amended statute. For a vehicle to qualify for the new credit, it must be a model that’s at least two years old, measured from the calendar year of which the vehicle is being placed into service. Additionally, the vehicle must have been bought new by a person other than the individual claiming the credit, comply with technical requirements for a new vehicle in Section 30D, and weigh less than 14,000 pounds.

Further, the revenue procedure defines a qualified sale as any transfer to a qualified buyer where the sales price is less than $25,000. A qualified buyer is defined as an individual who is purchasing the vehicle for personal use and hasn’t been allowed an EV tax credit during the past three years.

Most notably in the revenue procedure are the limitations on who qualifies as a buyer and the length of time between purchases of electric vehicles. Buyers must be individual persons and have not been eligible for the credit during a three-year lookback period. Expanding this credit should have a lasting impact on EV access through the secondary market, and it further contributes to an audience of consumers interested in wading into the EV market.