As soon as, Tesla raced to supply sufficient automobiles to satisfy demand. Now the corporate is scrambling to seek out prospects to purchase them.
Tesla’s supply numbers slumped for the second straight quarter in July — dropping under 50% of the US EV market share for the primary time within the firm’s historical past.
The corporate’s gross sales staff has been struggling to adapt to a a lot totally different market, in response to 14 present and former workers from Tesla’s gross sales division in North America. The sources, whose identities are recognized to Enterprise Insider, spoke on the situation of anonymity as a result of they weren’t approved to speak to the press.
Over the previous 24 months, the corporate has provided reductions, reorganized its gross sales groups (after which backtracked on its reorg), repeatedly shifted gross sales objectives, and vacillated between providing commissions to salespeople and threatening their jobs with performance-improvement plans.
None of it’s working.
Tesla is dealing with weak shopper curiosity in electrical automobiles and elevated competitors from different automakers, notably because it makes an attempt to place its dated automobiles in opposition to newer, cheaper fashions from rival legacy producers and cheaper Chinese language upstarts. The carmaker can also be trying to repair a spate of unhealthy publicity surrounding its CEO, Elon Musk — all with little in the best way of promoting initiatives or conventional gross sales methods.
The electrical-car maker made its mark by breaking trade requirements with its ad-free, direct-to-consumer gross sales mannequin. Now, a few of Tesla’s gross sales employees consider it is time for the corporate to start performing like a standard automaker.
“Tesla is at an inflection level,” a former supervisor, who labored on the firm for a number of years, instructed Enterprise Insider. “It is time to throw out the previous guide. What’s labored prior to now will not work now.”
‘The product ought to promote itself’
In contrast to Tesla, most conventional automakers function on a dealership mannequin. They farm out their gross sales to third-party franchisees who’re closely incentivized to dump the product utilizing quite a lot of tried-and-true techniques, together with promotions, financing provides, add-on merchandise, employees commissions, and gross sales occasions.
In distinction, Tesla retains most of its stock off-site, maintains a haggle-free pricing technique, and depends extra closely on on-line gross sales. Its showrooms are extra for instructional functions than promoting. At one level in 2019, Tesla even briefly removed its gross sales staff completely, promoting automobiles solely on-line.
“The thought is easy: The product ought to promote itself,” one gross sales advisor mentioned relating to Tesla’s technique. “We act extra as guides than salespeople.”
The perfect gross sales advisor is an individual with a big curiosity in tech and a ardour for Musk’s mission — having a gross sales background is a nonfactor, 5 staff mentioned. In reality, Musk has made it clear that Tesla’s gross sales advisors should not have something in frequent with the stereotypical “slimy salesperson” at conventional dealerships, one employee mentioned.
That technique started to flounder in 2022. At that time, Tesla hadn’t launched a brand new mannequin in years and had solely made delicate refreshes to a few of its different automobiles. Ready lists dried up and manufacturing started to outpace supply. The product wasn’t promoting itself anymore.
Altering techniques
Three present and former managers instructed BI that if Tesla needs to maneuver automobiles off the lot, it must ditch the advisor mannequin and rent skilled gross sales employees.
The corporate took a step in that path in 2022 when the gross sales staff started hiring staff with extra conventional gross sales and automotive expertise, the employees mentioned. A number of managers mentioned they welcomed new hires who might flip curious guests into consumers.
“We would have liked folks with extra of a hunter mindset,” one employee mentioned.
But when Tesla needs salespeople to hunt, it additionally must incentivize them, some managers mentioned — specifically by way of commissions. Tesla had largely averted commissions because the Mannequin 3’s 2017 launch, with salespeople relying as a substitute on annual evaluations for wage will increase. Three staff famous this method did little to inspire deal closures or increase automobile gross sales.
Tesla began experimenting with rewarding high-performing salespeople in 2023, providing $25 to $100 in fee for every Mannequin S or X offered, three staff mentioned. (For comparability, at a standard dealership, salespeople can usher in way more — normally incomes anyplace from 20% to 40% of the revenue). That initiative fell flat for some: A number of staff mentioned they have been by no means paid, because the fee was depending on the area hitting a minimum of 90% of its general aim. Tesla stopped providing incentives at a lot of its places through the second quarter of this yr, they mentioned.
“There is a motive why nearly all of gross sales roles supply fee,” one former supervisor mentioned. “It is as a result of it really works. It could possibly’t be all stick and no carrot.”
Worry is a typical motivation tactic at Tesla, seven present and former workers mentioned. Ten staff mentioned they noticed their every day gross sales objectives change on an virtually weekly foundation. When efficiency evaluations have been delayed in February 2023, staff’ gross sales targets at some places skyrocketed, with junior-level employees typically seeing their objectives double. A former supervisor mentioned the shifting objectives have been primarily about hitting quarterly targets, however two gross sales advisors mentioned these unrealistic expectations demotivated employees.
Those that missed targets typically confronted performance-improvement plans and eventual termination, 4 sources mentioned. One former employee mentioned there have been days when prospects have been so scarce it was inconceivable to satisfy their targets, making their efforts really feel futile.
The corporate elevated gross sales staff’ factors of contact with prospects. For the reason that pandemic, Tesla employees had largely been hands-off when it got here to buyer check drives, however in March, Musk mandated gross sales staff present demos of Tesla’s Full Self-Driving software program for all new consumers. This meant staff would sit within the automobile with the client throughout check drives, which gave them extra alternatives to pitch prospects on the advantages of proudly owning a Tesla.
Some staff mentioned the mandated FSD demo turned off some prospects who weren’t within the function and made it tougher to hit their gross sales targets, given the extra time the ride-alongs required. Others mentioned sitting in on the check drive gave them extra alternative to develop a gross sales relationship with the client.
Tesla merged gross sales and supply into one position in 2019, forcing gross sales advisors to do two jobs without delay. Early this yr, it reversed course, permitting gross sales employees to focus extra on enhancing their relationships with prospects with out the distraction of dealing with deliveries and logistics, eight staff mentioned. However shortly after Musk introduced a 20% workforce discount in April, Tesla backpedaled once more and reconsolidated the roles, the employees mentioned.
In 2023, Tesla began providing value reductions, which ate into revenue margins however failed to resolve its overproduction woes. Gross sales employees and managers mentioned the value cuts initially helped carry in additional site visitors, but it surely led some prospects to take a wait-and-see method — they did not wish to put their cash into one thing that was quickly dropping worth.
Leaving the period of ready lists behind
Musk has waved off issues that Tesla is perhaps struggling to promote its automobiles. Earlier this yr, Musk mentioned his firm was “between two main progress waves” and blamed rising rates of interest and financial uncertainty for lackluster supply numbers.
However 10 staff instructed BI they consider Tesla remains to be struggling to transition from promoting to early adopters to a bigger market. Whereas the employees see a bonus to Tesla’s in-house gross sales division and non-predatory pricing mannequin, these staff say Tesla must undertake extra aggressive gross sales and promoting methods, in addition to deal with one key problem: its growing old lineup.
Tesla launched its futuristic Cybertruck in 2023, however its $60,000-plus value level and polarizing design have made it extra of a luxurious car than a automobile for the plenty.
Earlier than that, the final new Tesla to hit the highway was the Mannequin Y crossover, launched in 2020. Whereas some particular person fashions have been refreshed, the modifications have been so delicate, they’re tough even for Tesla superfans to identify.
“The place are the product updates and facelifts?” Brian Moody, the chief editor of Autotrader, mentioned. “Altering advertising and marketing and gross sales can solely go up to now if they do not replace the merchandise.”
However Musk seems to have totally different plans for Tesla. The billionaire had little to say about auto gross sales throughout Tesla’s latest earnings name and has regularly positioned the corporate as a tech, AI, and robotics firm whereas downplaying its declining gross sales and overproduction points.
Musk has been imprecise about when a brand new, extra economically priced Tesla mannequin would hit the market, saying solely that it might occur in 2025.
Salespeople and managers, in the meantime, are left ready for one thing new to promote.
“Each time there is a new product, there’s these monthslong wait lists,” one former supervisor mentioned. “We will not be order takers if we do not have new merchandise.”
