Elon Musk taps his first right-hand man as a potential successor: Tom Zhu

Elon Musk taps his first right-hand man as a potential successor: Tom Zhu

According to multiple news reports, billionaire Elon Musk may already have chosen his successor at Tesla.

It is rumored that Tom Zhu Xiaotong, Tesla’s vice president in charge of the Asia-Pacific region, is to replace Musk as global CEO of the electric vehicle and clean energy company.

The reports are drawn from an article published in December by Chinese news outlet PingWest outlining Tesla’s intentions to promote Zhu to global CEO.

On Tuesday, Reuters reported exclusively that Zhu had been promoted to direct oversight of Tesla’s US assembly plants as well as sales operations in North America and Europe, citing an internal publication of reporting lines reviewed by the news organization.

The move makes Zhu the highest-profile Tesla CEO after Musk.

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Who is Zhou?

Tesla China President Tom Zhu speaks at the handover ceremony for China-made Tesla Model 3 cars at the American electric carmaker’s Shanghai Gigafactory in Shanghai, China, December 30, 2019. (Reuters/Yili Sun/File photo/Reuters Pictures)

Described by Reuters as a low-fuss manager, he favors Tesla-branded sweaters and lives in a government-subsidized apartment a 10-minute drive from the Shanghai Gigafactory.

People who work with him said that during Shanghai’s two-month coronavirus lockdown, he was among the first batch of employees to sleep at the factory as they sought to keep it running. Under his leadership, Tesla’s Shanghai factory has rebounded strongly from China’s COVID lockdowns.

Zhu and his reporting team were brought in by Tesla late last year to investigate production issues in the US, leading colleagues to speculate at the time that he was being groomed for a larger role.

He was born in China but now holds a New Zealand passport. Zhu joined Tesla in 2014. Prior to that he was a project manager at a company set up by fellow Duke MBAs, advising Chinese contractors working on infrastructure projects in Africa.

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What do the analysts say?

ELON MUSK TESLA

Tesla stock fell again in 2023 amid rumors that Musk would step down as CEO (Getty Images/AP/Getty Images)

“Musk is in control of Tesla’s fate,” Dan Ives, managing director of Wedbush, said in a company report on Wednesday. “This is the moment of truth for Musk to do damage control now, otherwise the brutal pain will continue.”

He continued, “As China’s President Tom Chu takes on a larger role at Tesla, Musk should take a more hands-on approach in 2023 as the Twitter distraction combined with the current order situation creates a perfect storm for the stock.”

Amid investor perception that Musk is spreading himself out with additional roles, particularly his status as CEO of Twitter, Tesla stock has reversed more than 53% in the past three months and another 35% in the past month.

Elon Musk returns to his office at Twitter’s headquarters in San Francisco

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TSLA Tesla Inc 113.64 +5.54 +5.12%

As rumors swirled about Musk’s potential departure, the company’s fourth-quarter delivery report showed the electric car maker miscalculated analysts by about 13,000. Tesla delivered 405,000 vehicles during the quarter, short of consensus forecasts of 418,000.

In the report, Ives said Tesla stock is “a black cloud now forming over the story.”

He added that the main concern for Tesla is declining demand from China at a time when competition for electric cars is steadily increasing domestically. “This is a crossroads in the coming year for Tesla that will either lay the foundation for its next chapter of growth or continue its slide from the top of the podium with Musk driving down the ramp.”

Reuters contributed to this report.

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