2 top Tesla manufacturing execs to leave as biggest challenge looms

Two top manufacturing executives are leaving Tesla Motors, including the global head of production, at a time when the electric-car company is preparing to launch its most important car: the mass-production Model 3.

Greg Reichow, Tesla's vice president of production and one of its highest-paid executives, and Josh Ensign, vice president of manufacturing, will leave the company. A Tesla spokesperson confirmed both departures and said Reichow will remain until his replacement is found.

A person familiar with the situation who isn't authorized to speak about the matter said the executive changes are linked to delays, glitches, and a recall that have bedeviled Tesla's Model X.

But Tesla denied any connection between the departures and production problems with its SUV.

"This is not about the Model X," said a Tesla spokesperson. "After being at Tesla for over five years and leading its production team for the past three years, Greg Reichow has announced his intention to take a leave of absence from Tesla so that he can have a well-earned break." 

Tesla shares fell on the news, dropping 4.2 percent to close the day at $222.56. 

5 departures

The latest high-level personnel changes brings to five the total number of Tesla vice presidents who have left the company this year, and Reichow marks the biggest departure. He served as the leader of car production and had been one of Tesla's highest-compensated employees, making almost $6.4 million in cash, stock, and options in the last two years, according to company filings. Tesla did not elaborate on Ensign's plan to leave.

"Greg and the team deserve a lot of credit for building an all-new manufacturing organization from the ground up and for making Model S and Model X a reality," Tesla CEO Elon Musk in an e-mail to Bloomberg. "We're confident that with the strength of the team, high-quality manufacturing at Tesla will continue."

In the same e-mail provided by Tesla, Reichow added: "My belief in Tesla's ability to successfully deliver great cars and inspire the world to drive electric remains as strong as ever." 

While Tesla described Reichow's exit as a leave of absence -- and other executives have left and rejoined -- the company also said Reichow will be involved in handing off his responsibilities to a successor to ensure uninterrupted production.

Model X delays

The launch of Tesla’s Model X, which Reichow helped oversee, was marred by delays.

Musk has publicly taken responsibility for what he described as engineering "hubris" that packed too many new features into the first version of the SUV, including the double-hinged "falcon-wing" doors and mono-post seats.

The Model X was delayed by more than 18 months, following missed launch dates for previous models. Several thousand of the earliest Model X vehicles were recalled over problems with the seats. 

“In retrospect,” Musk said in September, “we would not have had so many features and functionality.”

The company has been working to resolve the problems. Model X deliveries have been increasing, and reviews have been positive. Tesla will report first-quarter earnings after the close of stock trading on Wednesday.

Other senior executives who have left Tesla this year include Michael Zanoni, vice president of finance and worldwide controller; James Chen, vice president of regulatory affairs and deputy general counsel; and Ricardo Reyes, vice president of global communications. Tesla said that of 40 executive positions filled in the last year, only one has left. Half the people who report directly to Musk have been at the company for more than five years.

Reichow joined Tesla in April 2011. He had previously worked at U.S. solar panel manufacturer SunPower for more than seven years, according to his profile posted on LinkedIn, which cited no prior auto industry experience. Ensign joined Tesla in June 2014 after working at Honeywell for more than a decade. Ensign could not immediately be reached for comment.

Next up for Tesla may be its biggest manufacturing and production challenge yet: building the Model 3. The $35,000 mass-market electric car received refundable deposits for 400,000 vehicles in the weeks after the March 31 unveiling of the prototype.

Before the designated launch date of late 2017, Tesla needs to massively ramp up production capacity -- first for the Model X, then for the batteries that power all of Tesla's vehicles, and finally for the Model 3 itself. Much of that effort will now fall to an as-yet-unnamed top production executive.