Musk Tells Employees to Stay Away from Discounts to Sell Cars

Tesla CEO Elon Musk has warned Tesla store staff to stay away from discounts to drive up sales numbers.

In an e-mail to employees that Bloomberg also received, Musk asked them to stay away from price cutting and to adhere to a sales approach he called “fundamental to our integrity.”

The Tesla CEO published his e-mail to company employees on Twitter in response Wednesday to a thread on Reddit, where a user questioned a sales discount offer.

Tesla found out about the price discounts through a post on Reddit, where a Tesla customer said that he’d been offered a discount by the company. Must responded on his Twitter page that he’d investigate the claim; and later posted that a corrective action was taken.

Musk’s email then went out to employees. Discounts are appropriate for when for Tesla vehicles that had been used in test drives or that were damaged before delivery, he said. But there can never “be a discount on a new car coming out of the factory in pristine condition, when there is no underlying rationale,” he wrote in the email.

Tesla Motors has worked on avoiding the car shopping experience that dealerships typically provide. The corporate-owned retail centers have resulted in heavy state lobbying and lawsuit filings for Tesla, but the company has been striving to keep the customer experience uniform. Finding deep discounts well below manufacturer suggested retail prices is common for car shoppers visiting franchised dealer lots.

“I’m sorry for the draconian language, as I am super grateful for your hard work, but there is nothing that matters more than our integrity as a company,” Musk wrote. “Customers need to know with absolute certainty that they can always trust Tesla to do the right thing.”

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Tesla has been taking recent steps to drive up attention and demand to hit sales targets. The company introduced a 60-kilowatt-hour Model S in June that starts at $66,000 before federal or state incentives. The well-publicized 100-kwh battery option with additional range was released in August. The company also announced a two-year lease deal on orders placed by Sept. 12.

Brad Erickson, an analyst at Pacific Crest Securities, wrote a research note to clients om Wednesday. Erickson said that he’s seen discounting being done by Tesla to drive demand.

“We detected aggressive Model S discounting at U.S. sales centers intended to maximize Q3 deliveries,” Erickson wrote. “We found Tesla has been employing a deeper discounting formula to drive sales of inventory models, with all offers expiring this Friday, the last day of the quarter.”

In his email, Musk also encouraged employees to keep up the hard work. He said that it’s been an excellent quarter and that it’s “likely to be the best ever in Tesla history.”

Automotive News