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Tesla eliminates employee bonuses, resulting in a significant reduction in the overall compensation of many retail employees.
Some Tesla employees are suspicious of the move before seemingly imminent layoffs.
Earlier this week, Tesla launched the long-promised version of Model 3 at $ 35,000.
CEO Elon Musk said he plans to make the price viable by moving all online sales only, closing stores and downsizing.
But the company has not yet fired employees. Electrek learned from Tesla employees that the builder had stopped all bonuses for retail staff.
According to some Tesla employees speaking to Electrek, these premiums accounted for most of the total compensation of many retail workers.
This has allowed some of the major owners to earn a salary in the six-digit range.
Now that Tesla is moving to online sales, the company removes any commission for retail employees, even though, apparently, they will still manage sales throughout the transition period.
Some employees told Electrek that they thought Tesla was reducing their compensation to try to remove them during the transition before the layoffs in order to avoid having to pay a severance pay.
We asked Tesla about the situation, but the company declined to comment.
In an email sent to employees and obtained by Electrek, Tesla CEO Elon Musk explained the reasoning behind online sales:
"Last year, 78% of all model 3 orders were placed online rather than in a store and 82% of customers bought their model 3 without having ever tested.
Note that Musk only talks about model 3, which was not in all stores and had limited testing facilities for much of 2018. He did not mention anything about sales of S and X models. This indicator also does not apply to customers who were exposed to Tesla via stores, then chose to go home and order online after having had interviews with Tesla's retail team.
Instead of employees testing customers and managing sales, Musk says sales will be made online and that customers will be able to return the car within a week if they are not satisfied.
He wrote in the e-mail to the employees:
"Customers can now purchase a Tesla in North America via their phone in about a minute and this capacity will soon be expanded around the world. We also greatly facilitate the process of returning and returning a Tesla without testing. You can now return a car within 7 days or 1000 km for a full refund. Consumers are becoming more comfortable with online shopping, which is particularly true for Tesla, a testament to the products we manufacture. "
He added:
"As a result, over the next few months, we will close many of our stores and significantly reduce our sales and marketing expenses, which will help make the price changes we've announced today possible." The transfer of all online sales, combined with other ongoing cost savings, will allow us to drop about 6% on average, which will allow us to reach the price level of $ 35,000 from Model 3 ".
Musk explained what it would mean for Tesla Retail employees:
"Unfortunately, this means that some jobs will be affected or transferred to other areas of the business. It's a difficult decision, but [is] necessary to make our cars more affordable. Our sales team has fought on the front lines to advance our mission and has always been our link with hundreds of thousands of customers. I wish to express my sincere gratitude for all that you have accomplished.
In the coming weeks, we will be evaluating all aspects of our sales and marketing organization to understand where operational efficiencies exist and how best to support the transition to online sales, while continuing to provide a shopping experience. really impressive and educational. "
The CEO said that more details on the transition would be published soon.
Electrek's Take
If Tesla really tries to avoid redundancy payments by pushing employees through the transition, it's really disappointing. This is the usual greed behavior of a company that I would not expect from Tesla.
But at an even higher level, the moment seems to be turning bad.
Tesla has already implemented price reductions that appear to be related to the shift in online sales, store closures and downsizing.
Still, Elon gives the impression that they have just launched a sales review to evaluate "all areas of our sales and marketing organization to understand where there is operational efficiency."
Should not they have done this before changing prices? Do they really know what kind of impact this will have on costs and sales?
I can understand that moving all sales online has no significant impact on Model 3, but what about Model S and Model X? Why did not he include the statistics of these cars? The stores all had a presentation and a fleet of suitable tests on the S and X model fleets in 2018. I think it was more valuable information for the period.
Especially since these products are more mature, model 3 still belongs to the "new product excitement" category, where first users, who would be more likely to order online without a trial, still represent a high percentage of all new products. buyers.
Let's do a quick informal poll.
If you are an Electrek reader who has purchased a Model S, Model X or Model 3 in the past year, have you purchased your car online or in a store:
Have you done a test before ordering your Tesla?
Now, do not get me wrong, no one is happier than me that Tesla finally managed to deliver Model 3, worth $ 35,000. I just wanted them to deliver it through improvements in production and profitability. We discussed it in more detail in our last podcast episode.
One thing is certain, this whole transition seemed hasty.
What do you think? Let us know in the comment section below.
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