Tesla CEO Asks Employees To Stick To ‘No Discount Policy’

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In response to concerns that Tesla is moving away from its long-held policy of not discounting its cars, CEO Elon Musk urged employees in an email to stick to a “no discount policy” sales approach, calling it “fundamental to our integrity.” On Wednesday, Musk tweeted the email in response to a thread on Reddit in which a user inquired about a sales discount offer, according to Bloomberg.

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Tesla employing deeper discounting formula?

Pacific Crest Securities analyst Brad Erickson questioned demand in a research note, saying, “We detected aggressive Model S discounting at U.S. sales centers intended to maximize Q3 deliveries… 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.”

A Reddit user then claimed that he had been offered a discount too. Musk responded by saying that he would check out the claim. Later, the CEO posted that corrective action was taken, notes Bloomberg

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Musk then wrote an email to employees saying it is fine to discount floor cars or models that were damaged before delivery or used in test drives, but there can never be a discount on a new car that comes out of the factory in good condition “when there is no underlying rationale.”

Never a discount on a new car: Musk

This is not the only time the automaker has put its cars on sale. Just last month, Electrek reported that Tesla stores were offering discounts to move P90s. In addition, an independent site focused on Tesla products added a column for discounts on inventory models.

But Musk is quite adamant that the electric car maker does not use that tactic. He tweeted that he will track this down, so it is possible that even Musk is not aware of the sales methods used by some employees.

“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 said.

He has been working hard to increase deliveries and improve production. In an Aug. 29 email obtained by Bloomberg, he told employees that achieving a positive Q3 is critical, and this requires producing and delivering every car they possibly can. The automaker is taking more drastic measures to keep up strong sales of the Model X and Model S while preparing to deliver the more affordable Model 3 late next year.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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