Tesla is reversing most of its “online sales only” strategy launched earlier this year. The automaker is going to hire more sales and delivery staff, end sales commission for Tesla Advisors, and increase salaries and stock bonuses, according to sources familiar with the matter.
Earlier this year, Tesla launched the long-promised $35,000 version of the Model 3 and CEO Elon Musk said that they plan to make that price viable by moving all sales online-only, closing stores, and reducing retail headcount.
It resulted in Tesla slashing retail employee compensation and closing a first wave of stores.
Later, the automaker ended up reversing some of those changes, especially when it comes to closing retail locations and bringing back some compensation through sales commission.
These changes came during an important cash crunch from Tesla, which was introducing the Model 3 in Europe at the time.
Now Tesla is reversing even more of those original changes.
As we reported yesterday, Tesla is planning to open a new type of retail location called ‘Tesla Centers’ to avoid dealership restrictions and increase deliveries.
Furthermore, sources familiar with the matter told Electrek that Tesla communicated to employees that they plan to hire more sales and delivery people.
They are also eliminating the commission structure, which was already revised down earlier this year.
Sale advisors, who were the most affected by the reduction in compensation, are being told that they will get a 20 to 40% salary increase to compensate for the change.
Sources familiar with the matter told Electrek that Tesla still plans to offer bonuses, but they will be awarded through stock options when goals are achieved.
With removing the focus on commission, the automaker is also focusing on deliveries with new delivery employees being sent to every Tesla retail locations to oversee the delivery process.
They will also be able to sell cars.
Tesla aims to reduce the number of people buyers have to talk to when buying a vehicle, which it underestimated when announcing that it was moving all sales online.
We contacted Tesla about these new changes and we will update if they issue a comment.
Electrek’s Take
My biggest issue with Tesla’s “online sales only” move earlier this year is that it was basically a justification for significantly reducing the compensation of the sales staff even though they were still doing the exact same work.
Between the salary increase and the new stock options, it’s hard to tell exactly if sales advisor compensation is going back to what it was before, but I definitely appreciate Tesla correcting course and also going back to its early intention to not distance itself from the car dealer model, which revolves around sales commissions.
I feel like it shows Tesla is in a different position financially right now.
They also don’t care about demand as much. Model 3 has reached a level of self-sustained demand with the current sales presence in all markets.
Now they need to focus more on deliveries to create a better flow of cars where the demand is located.
It might be hard to execute the whole new strategy during the fourth quarter so it could have more of an impact next year.
Either way, it should be an interesting quarter.
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