Behind Tesla's Expansion into Rural Areas: Zhu Xiaotong Promotes the Sinking of the Sales System

In May 2024, according to media reports citing industry insiders, Tom Zhu returned to Shanghai and resumed his previous position as the vice president of Tesla Greater China. At that time, Tesla's sales in the Chinese market declined for the first time. After his return, he immediately started visiting stores, which was a work habit he had maintained before - to understand the real situation from the front line of sales.

In the first five months of last year, Tesla's sales in the Chinese market decreased by 0.4%, and this was achieved even with price cuts and enhanced sales policies. Among them, sales in May last year decreased by 15%.

The direct reasons for Tesla's continuous sales decline can be attributed to three aspects. First, the implementation of Tesla's FSD in the Chinese market has made little progress, and the intelligent advantages established by China's new car - making forces have influenced consumers. Second, Tesla has few options to deal with the price war. Third, the upgrade of Tesla's facelifted model, the Model 3, is limited, and its market share has been eroded by competitors. For example, the Xiaomi SU7 mainly compared with the Tesla Model 3 when it was launched, and its sales last year exceeded the target by 30%.

Of course, the internal problem of Tesla China is that the sales regions have been further divided. After the new sales region managers took office, the stores and organizational structure have been continuously adjusted, which has affected Tesla China's sales ability. However, this also means the beginning of Tesla China's transformation towards a new competitive landscape.

Tom Zhu's Departure and the Weakness of Tesla China's Sales System

Tesla disclosed in a regulatory filing submitted to the U.S. Securities and Exchange Commission (SEC) on April 6, 2023, that Tom Zhu had served as the senior vice president of the company's automotive business since April 2023. In fact, Tom Zhu first appeared at Tesla's Gigafactory in the California headquarters and the Gigafactory in Austin, Texas, in August 2022, to assist Tesla CEO Elon Musk in increasing production capacity and participating in handling some global affairs.

Since then, Tom Zhu has gradually withdrawn from the front - line management of Greater China and the Chinese market. He not only gradually quit many work groups but also stepped down as the legal representative of Tesla's used - car affiliated company, Ludesi Automobile Sales and Service (Beijing) Co., Ltd., and Tesla (Shanghai) Co., Ltd., while still serving as the chairman, and still having an influence on the management of the Chinese market.

In January 2023, Tom Zhu's internal appointment was confirmed. Before taking up his position in the United States, Tom Zhu made a special trip from Shanghai to Beijing at the end of 2022. This matter was related to Han Taoqi, the newly appointed sales manager of the Beijing region.

Han Taoqi joined Tesla China in 2020 and served as the head of the corporate customer business, that is, the large - customer business, mainly responsible for corporate customer sales, used - car replacement, and the sales consulting customer service center.

She was promoted very quickly within Tesla China. In April 2022, she still participated in the anniversary celebration of her alma mater, Tongji University, with the title of head of the corporate customer business. However, in July of the same year, she attended the opening ceremony of Tesla's first experience store in Fengtai District, Beijing, the Fengke Wanda Experience Store, with the title of head of the Tesla Beijing region.

The Beijing region of Tesla China was split from the North region managed by Ma Li. Since then, the market in the North region and the Beijing area has been segmented.

At the Tesla Center on the South Fourth Ring Middle Road in Beijing, Tom Zhu convened a meeting of all the store managers of Tesla in Beijing to express his support for Han Taoqi. After she took office, her management style was tougher than that of Ma Li, the former head of the North region (the Beijing region used to belong to the North region), and her requirements were more demanding. More than 10 store managers left their positions one after another in a short period.

This meeting lasted about an hour. Tom Zhu's general message at that time was: Han Taoqi's decisions do not represent herself but Tesla China. Those who left had experienced many difficulties with Tesla before, but now they left just to save themselves and did not want to take on responsibilities anymore. Those who wanted to stay must fight hard to stay on this ship. His statement was considered to be in support of Han Taoqi.

Initially, Tesla's sales regions in China were divided into four major regions, namely the East, West, South, and North. As Tesla's first salesperson in China and the store manager of the Fangcaodi store, Ma Li became the head of the North region. At the end of 2022, as the Beijing region was split from the North region, Tesla China's sales regions were divided into eight, namely Beijing, the North region, East 1, East 2, Shanghai, the South region, West 1, and West 2.

In the second and fourth quarters of 2023, Tesla China held two manager summits, and the participants included the heads of each sales region, store managers, and sales backbones. In the second quarter of 2023, Tesla China's sales performance was very good. Tesla's financial report showed that in that quarter, Tesla's sales in the Chinese market soared by 48.9%, and revenue increased by 51.33%, which was the main source of Tesla's global business growth.

In the fourth quarter, Tesla China contributed 35% of Tesla's global deliveries and 24.3% of its revenue in that quarter, and its revenue rose to $6.1 billion, exceeding the $5.73 billion in the second quarter of that year.

However, hidden dangers were also buried. To help Tesla achieve its annual delivery target of 1.8 million vehicles, Tesla China started to cut prices for the Model 3 and Model Y in August 2023 and used insurance subsidies and super - charging rights transfers to accelerate vehicle sales and deliveries.

As demand was over - drawn in advance, in the first quarter of 2024, Tesla's sales in the Chinese market declined, and retail sales decreased by 3.64% to 132,400 vehicles. In the first five months of last year, Tesla's sales in the Chinese market decreased by 0.4%. Coupled with the launch of high - profile products such as the Xiaomi SU7, Tesla's price cut in April and the subsequent zero - down - payment and limited - time zero - interest policies did not significantly stimulate sales recovery.

With at least a 10% global layoff, the layoff ratio in some departments of Tesla China was close to 50%, and the sales system was also among those affected.

Tom Zhu's Reorganization of Sales: Dividing Regions and Focusing on the Low - tier Market

Before this round of layoffs, Tom Zhu had already returned to Shanghai, but he never appeared in public and kept a low - key profile internally. At that time, many people within Tesla China only learned about his return after seeing the news reports. However, this did not prevent Tom Zhu from immediately starting his work after returning to Shanghai - visiting stores. Starting from Shanghai, he also went to Changsha and Beijing, visiting all the major cities.

Before he returned to China, a round of replacement of regional sales managers in the Tesla Chinese market had been completed. Han Taoqi, who was in charge of the Beijing region, replaced Gao Weize in the East 2 region and was responsible for corporate customer business, the Beijing region, and the East 2 region at the same time. She was one of the few managers within Tesla China who managed two sales regions and three sales businesses at the same time. Kong Yanshuang, who was originally in charge of the South region, was transferred to the Shanghai region to replace the former sales manager Gong Ling, who was transferred to the South region, and there were no changes in other regions.

In June last year, the layoff at Tesla China basically ended. Around the same time, the Beijing region rejoined the North region, and Ma Li, the head of the North region, continued to be responsible for the Beijing market. During his store - visiting process, the store managers and clerks of many stores asked him the same question during face - to - face interviews: "Can we stop manipulating data to boost sales?"

As Tom Zhu's store - visiting deepened, a new round of adjustment of Tesla China's sales system also began. Shortly after the Beijing region rejoined the North region, the North region was split into three areas: North China, Northwest, and Northeast. Ma Li was only responsible for North China, while Lin Bowei and Jiang Jiajie were in charge of the Northwest and Northeast respectively.

At the beginning of this year, Han Taoqi also stopped being responsible for the East 2 region. Coupled with the fact that the Beijing region had been incorporated into the North region before, she returned to only being responsible for corporate customer business, and her scope of authority was further reduced. Her departure from the sales system was considered a correct decision. Before, her management style in the Beijing region and the East 2 region was strict and high - pressure, and she was known for her roaring during meetings and the requirement that "even if a bird enters the store, it must be recorded in the turn sheet". After the East 2 region and the East 1 region were integrated, they were split into several small areas, and the same happened to the South and West regions.

A Tesla employee who has followed Tom Zhu for many years said that this round of adjustment of Tesla's sales system organizational structure is to meet the needs of the low - tier market. In the future, Tesla's store construction will mainly focus on the low - tier market and low - tier cities, and such adjustment can achieve refined management of sales regions.

After this round of adjustment was completed, on June 4 this year, Tesla's Model 3 and Model Y first appeared in the catalog of new - energy vehicles for the countryside, which means that Tesla is expected to enter the Chinese rural market at a lower price.

This article is from the WeChat public account "Power Plant", author: Hua Zijian, published by 36Kr with authorization.