Elon Musk Issues Mass Email To Tesla Employees – Congrats On Q3 Push, Stop Selling New Cars At Discount

Elon Musk

SEP 29 2016 BY ERIC LOVEDAY 131

Tesla CEO Elon Musk issued a mass email to all Tesla employees. The emails congratulates the worker for sales in Q3, yet disciplines some for selling new cars below listed price.

And rather unexpectedly, Musk Tweeted out the email in its entirety in response to a question (and Reddit link) posed on Twitter.

question

musk 2

Here’s the Reddit post if you’d like some background info on the situation.

And now it’s time for the mass Musk email:

Mass Musk Email

Mass Musk Email

Musk…grateful, yet at the same time disgusted with employees for apparently discounting cars without an order from the top.  Hmm…an odd situation for sure.

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131 Comments on "Elon Musk Issues Mass Email To Tesla Employees – Congrats On Q3 Push, Stop Selling New Cars At Discount"

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Would think their “system” wouldn’t allow that, i.e., accounting is still saying “where’s my other 5k?”

Ditto. Especially with the BTO centralized sales model, where’s there’s a specific detailed order before they start building a car, how is this possible? It’s not like there are multiple levels here with country importers, regional distributors and dealers…

Don’t know how actual payment is done — $100K isn’t credit card territory — but presumably there’s some kind of advance on the price when ordering to avoid gratuitous cancellations. That order is a contract, and should completely lock in the cost.

Only thing I csn think of is that some cars get misclassified on purpose as demos / flooe models, but again, that shouldn’t be up to individual salespeople at all.

As to the “never any discount” policy, bullshit. Basic Econ 101 demand/supply curve. If it turns out there a serious slowdown in sales, they’ll lower prices officially, for all new buyers (or, say, eliminate the destination charge, or lower price on options).
That’s no different than a discount in any sense — there’ll be customers who paid more for the exact same car than others.

Or Tesla can do what Toyota did with the Mirai: keep the MSRP the same, but offer Trailblazer Purchase Support $7,500. 😀

BS on you. That is a huge difference. One leaves an opening for individual negotiations and the other doesn’t.

+1

wavelet said:

“As to the ‘never any discount’ policy, bullshit. Basic Econ 101 demand/supply curve. If it turns out there a serious slowdown in sales, they’ll lower prices officially, for all new buyers (or, say, eliminate the destination charge, or lower price on options).”

Well, I think Tesla tries to avoid the situation you describe by carefully managing demand, and making sure their supply never exceeds it.

But yes, there have been cases where Tesla has offered discounts. As I recall, there was an offer of discount on financing in China, where their sales were far below expectations. And Tesla has, several times, doubled the discount on their tiny numbers of “inventory” cars; increasing the $1/mile discount to a $2/mile discount, and I think there is also a discount for every month of age of those few inventory cars.

Huh?
They can’t directly manage demand — that’s exactly the point… Except by changing the effective price (-;

LOL! Now who’s being naive, wavelet?

Of course Tesla has been managing demand; managing that very carefully, in an attempt to hit that “sweet spot” of maintaining demand just a bit higher than their production.

Some examples of how Tesla has created media excitement and/or made new offerings to increase demand: Deploying and regularly expanding the Supercharger network; the ongoing incremental improvement in 0-to-60 times; the “refreshed” front end of the Model S; and most notably, the recent offer of reduced-price S60 and X60. These are all examples of how Tesla has increased demand for its cars. And the delayed release of the Model X is an example of how Tesla delayed an increase in demand when it would have done them no good to do so, due to limited battery supply.

The key word is the part where Elon said “where there is no underlying rationale”

I’m pretty sure strategic lowering of prices to counteract changes in the supply curve don’t count as discounts. They count as reduction of price. A discount is by definition a deduction of the usual cost of something. A price reduction is a lowering OF the usual, baseline cost prior to discounts.

Furthermore, such a price reduction most definitely DOES have an ‘underlying rationale’, so Elon wouldn’t be contradicting himself.

My understanding is they shipped extra cars regionally, which had 75kwh batteries and were mostly “60” designations. The “discount” issue hovers mostly over selling the “75” option for $1-2k vs. 8.5k. Either way, they both had 75kwh batteries inside. They both have AP hardware, and that $3k option had to be paid for.

I wondered how Tesla could expect significant numbers to pay for the $8,500 option, since the power, and daily charging abilities of the “60” were substantially the same. A lot of it boiled down to range-charging, for the 75D’s 259 mile spec.

It looks like Elon Musk is a micromanager. A sales price above product cost = positive cash flow. Be grateful when someone has enough disposable income to buy your expensive vehicles.

Tesla needs competition and will get it with the Chevy Bolt. Tesla will eventually learn how competitive car selling works.

Well another new username just mysteriously popping up to spread anti-Tesla FUD.

I wonder which of the existing haters/shorters/cynics on InsideEVs this person is?

Do you have any other conspiracy theories that you would like to share with us?

And who elected you the forum sheriff? ¯\_(ツ)_/¯

This is no conspiracy at all, we all know that big corporations hire hundreds, if not thousands of bogus commentators to influence public opinion. How could they miss this huge opportunity of efficiently speading their gossip about electric cars… P.R. psychological warfare, propaganda nearly free!… and on this particular site, you are my friend, the number one on my list.

This is no conspiracy at all, we all know that big corporations hire hundreds, if not thousands of bogus commentators to influence public opinion. How could they miss this huge opportunity of efficiently speading their gossip about electric cars… P.R. psychological warfare, propaganda nearly free!… and on this particular site, you are my friend, the number one on my list.
¯\_(ツ)_/¯

And which big corporation hired you to be their bogus commentator to influence public opinion? Wow! It’s real easy to play this baseless accusation game on the internet! 😀

Are you really my friend or are you actually my frenemy?

Am I getting a little to close to the truth for your comfort sven?

If by that you mean exposing yourself as paranoid and delusional, then yes.

Do you also hear voices in your head? If yes, is Elon’s voice one of them? 😉

LOL nope, no voices in my head sven but thanks for exposing yourself with your Trump-like lack of logic attacks!

Nobody listen to crooked Get Real. He has small hands, and I doubt that he was born in the United States. I want to see his birth certificate! 😉

There is a New Sherrif in Towne! Thanks for the heads up!

+1

Well, he’s right about Elon being a micro-manager.

And he’s probably right to say that someday, Tesla will have to start competing for sales by negotiating their prices in at least some cases… but not as soon as he thinks. When Tesla approaches the maximum market size it can exploit, and is no longer a growth company, then it will be time to start thinking about doing “a deal deal”* with customers.

*From “Kelly’s Heroes”:

CRAPGAME: Then make a deal!

BIG JOE: What kind of deal?

CRAPGAME: A deal deal! Maybe the guy’s a Republican.

I didn’t think anyone else knew this movie, props to you.

I like the mercenary German tank commander:
https://www.youtube.com/watch?v=Csv1wXOr5tY

The scene owns a bit to Sergio Leone.

Looks like Elon Musk is learning that if you sell cars you have play in their game to raise sales.

The reality is people like negotiating a lower price on a car. Also what Elon Musk is failing to remember is that everyone who is buying a car a washing machine or a burrito has a fixed price in their mind that they are willing to pay. This is why I will spend $2.00 on a burrito but I won’t spend $2.70 a burrito.

What has raised sales here is that people are feeling they are getting special deals.

I have never seen any study of whether or not people like negotiating the price of a car, but I can speak for myself: I hate it. I absolutely hate this manipulative sales model where all the prices are inflated to begin with in order to play tricks on people and increase the pressure to buy. If you decide right now, you get a $12,000 discount! It is a sleezy tactic – and the fact that very similar tactics is run-of-the-mill in all kinds of sales in our modern world doesn’t make it less so. Consider for a moment why we favor capitalism over socialism. It’s all supposed to be about the incentives of businesses becoming aligned with the interests of the public, of everyone. We get better products and services because that is more profitable, right? Well, if so, would not such a system work better the more transparent it is? The more accurate information we get, the better our decision making will be, and the greater the incentives to provide REAL VALUE in the form of better products and services becomes. By contrast, when information is obscured (in this case, not knowing what other people paid for the… Read more »

Ocean Railroader said:

“The reality is people like negotiating a lower price on a car.”

On what planet?

On planet Earth, the reality is that people overwhelmingly hate the nerve-wracking process of haggling over the price of a car with a professional whose job it is to manipulate and pressure them into paying more than they ought to.

The stress-free process of buying a Tesla car is one of the reasons why Tesla has a higher customer satisfaction rating than any other auto maker.

Oh, you mean the Chevy Bolt that gets a fraction of the attention and hype Tesla gets? The Chevy Bolt that won’t even be sold in left hand drive countries like mine or Japan? The Chevy Bolt that’s sold by a company which is still – for all intents and purposes – slacking in the EV department and still predominantly views EVs as compliance vehicles. The company which doesn’t have any supercharger network nor any interest in building one?

Seriously, how deluded can you possibly get?

The no discount policy is one of the things I respect the most about Tesla. I am fed up feeling screwed every time a leave a car dealership just because am not a very good negotiator. Once Tesla open a store in my country I will never go back to the dealership assholes I have to put up with now!

Eduardo Pelegri-LLopart

I agree. This is one of a handful of key components of the Tesla brand.

That’s a first. Someone gushing in their happiness to pay full price.

It’s not about paying full price, it’s about everyone being treated equally.

Management 101. If you praise employees, don’t whizz on the flowers. This should be two memos.

I love it when random dudes on the internet start telling multi-billionaires how to run their companies (the same ones they’ve been running super successfully for years)

I love how random dudes in the internet think billionaires are perfect in every way.

And where exactly did I say that he is perfect in every way?

It is implied by saying that random dudes should not suggest improvement. If no improvement is necessary, then, perfect already.

“It is implied by saying that random dudes should not suggest improvement. If no improvement is necessary, then, perfect already.”

In many ways perfection “as viewed by the masses” is a complete and total fallacy. Even if you and everyone else on the planet except myself agreed that Tesla made a perfect decision.

The problem with your argument is that not everyone is going to agree on what ‘perfect’ actually is. There’s always going to be someone out there who disagrees at any given time. Because of this, by your very logic, improvement is ALWAYS going to be, key word: necessary. Ergo: nothing is ever perfect.

The other person’s point wasn’t so much that Tesla is already perfect. It was more to do with the fact that a random dude on the internet is very unlikely to be a graduate in business studies or economics and in any qualified position be be providing criticism worth taking seriously.

And at the end of the day, Tesla is a serious company that generally appeals to and recruits driven individuals who have a passionate belief in what the company stands for. I very much doubt many of these people would simply leave on the basis that their praise had a bit of a poison dart mixed in with it. Specifically when you consider only a small number of employees are even guilty of under-selling in the first place.

Elon’s tactic is to be very forward. Some companies like to drive hard results through brutal honesty rather than treat their workers like children who need a pat on the back and a stick of candy. It’s not an invalid strategy.

My Dad’s a CEO. He personally likes to lead in a more friendly and encouraging manner to his employees, but that doesn’t mean his way of doing things is the ONLY way of doing things. What Elon did isn’t necessarily a 101; it’s just a DIFFERENT approach.

Strawman == destroyed.

😀

Musk probably skipped that class, he was too busy inventing things and being brilliant.

armchair-micro-management 101 — whine on the internet about pedantic petty things like 1 email or 2.

Thanks for the lesson on armchair micro management Loboc.

/sarc

Have you ever thought that the email was primarily designed for external consumption, so it HAD to be tied into just one email?

urvw

It doesn’t matter if the audience is multiple venues. Mixing the message has the effect of obfuscating the point. And no, I don’t believe that this is trivial. At least no more trivial than the other drivel posted here.

Management 102: If you use two memos, you lose the excuse to publish not just the “corrective” action on Twitter, but also include the upbeat news about good sales.

Sometimes taking exception from some dogmatic rule is a smart move. But it does require a little bit of thinking when leadership involves more than following Management 101 dogmas.

One thing I’ve come to learn is no matter WHAT aspect of life it may be, there’s ALWAYS someone who thinks they know better and are happy to try and tell you off. It’s utterly impossible to do something that absolutely everyone agrees is done properly.

I’m a TSLA fan but even I have grown weary of the quarterly excuses. Last quarter Elon touted that they finished with a production rate of 2200 per week. If they don’t deliver over 25K this quarter then obviously they couldn’t sustain that production rate. I’m more interested in production rather than deliveries. I believe their goal was to end this quarter with a production rate of 2300 or 2400 per week. I would hope that their production numbers for the quarter are closer to 30K than 25K.

You’re a fan of the stock?!? Or of the company, Tesla?

In a world full of speculative “investment” the two are not the same. And I genuinely can’t make out which one you mean, or even if the distinction is intended. Although it seems to me normal people speak of Tesla, Microsoft and so on – not of TSLA and MSFT. Unless they really mean the stock specifically.

Ah the Tesla business model, no discounts. Great for consumers.

It is great for consumers. +1

I hated buying a car from a Stealership after going to several pricing them out and finding out the one further down the street had it for $2k+ less.

Price disparity’s a B!TCHAZZ!

and yet all of those prices were less than msrp. so you got a discount whereas with tesla you never get a discount.

If anyone thinks MSRP is even remotely real, then I have a Bridge to sell you at a discount!

Don’t act like the stealerships are doing you a favor by selling you a car without overhead cost built into their price. MSRP is just “Fluff” crap they’re trying compare to so you ~think~ you’re getting a better deal from the stelership as opposed to buying direct.

Well, that’s one way to look at it. A different viewpoint is that legacy auto makers list fake, inflated prices, knowing that their dealerships will in most cases negotiate lower actual sales prices; whereas Tesla lists the actual sales price of their cars, in detail.

And also, Tesla doesn’t inflate the sale price with fake expenses like “dealer prep”.

Not defending dealerships at all, but there are some legit “doc” fees that dealerships incur. Have to pay someone to push the paperwork, go the tags/title work, etc…

Anything more than a couple hundred bucks is robbery though. Like VA dealers charge $699 for fees, while a dealer across the border in MD only charges $300. Really?

Unless you can opt out of these fees, what is the rationale for not simply including it in the sticker price? The simple truth is the sales profession is rotten to the core. Go and read their bibles. Listen to their favorite quips. Very much of it revolves around the fact that human psychology has lots of weak points, if not defects, that can be quite easily exploited. Being better than your competitors at exploiting them is sadly a huge part of doing business in the modern world. For instance, their pope Cialidini opens his famous book Influence with a tale of a woman selling souvenirs who accidentally discovers that her sales go way up when she doubles her prices. We are told about the reasons for this and reminded that in her case it makes perfect sense to basically rip off people by using a high price to fool them into believing that the products are far more valuable than they really are – since after all the shop sells mostly to tourists, so there is little repeat business anyway… Another example of a weird fact is that adding the word “because” to a request in itself increases compliance… Read more »

> ” it makes perfect sense to basically rip off people”

If people see the product, and agree to pay that price, then it’s not a ripoff.

A ripoff would be, if you bought something, and they switched it at the last second for a cheap counterfeit product while wrapping it up.

Also, you think there is no competition between souvenir shops. There are so many!

You don’t understand the meaning of the word ripoff. No one is forcing you to buy anything.

Of course it is a ripoff! If I try to sell something worth very little at a price that reflects this, but discover that many are foolish enough to assume, if the price is much higher, that the product must be worth a lot, of great quality, or similar, and I proceed to use their ignorance to my advantage, then clearly I am exploiting them. I’m willingly making them objectively worse off while enriching myself.

Your argument is akin to saying that if a parasite makes you feel good, but kills you, it isn’t really worth worrying about.

AlphaEdge said:

“If people see the product, and agree to pay that price, then it’s not a ripoff.”

Good grief. There is reason why the saying Caveat emptor, or “Buyer beware”, became a watchword back in the days of the Roman Empire. The same principle applies today.

And I have to wonder just what business you’re in, AlphaEdge, that you’d make such a claim as that. Somehow, I suspect that your business has as its operating principle “A fool and his money are soon parted.”

bro1999:

“Have to pay someone to push the paperwork, go the tags/title work, etc…”

Sure. If we accept the premise that the middleman of the dealership is a legitimate business (which I don’t, but that’s another argument), then the dealership has a legitimate reason for its markup: to take its cut, which includes not only its expenses (overhead, employee salaries, etc.) but also a decent profit.

But all that is supposedly included in the list price of the car. The dealer doesn’t pa the auto maker full list price; he pays only wholesale price. The list price is retail price. Any additional amount tacked onto the retail price with no actual value added — and “dealer prep” is one example of that — is just price gouging.

The dealership franchise model also greatly complicates things. Buyers sometimes think that the dealer’s wholesale cost is the same everywhere at every dealer for identical cars. It isn’t. Not at all. A dealer’s actual cost will change based on overall dealership volume, holdbacks, sales bonuses from the manufacturer, unadvertised direct manufacturer to dealer incentives, floorplan costs, etc. On top of that individual dealership overhead and stuff like revenue from repairs, etc change how much the costs are on top of how much the car costs them. All of these can be very different from one dealership to another, and one state or region to another. But the car manufacturer has to advertise one singe national MSRP that doesn’t take any of that into account. So it ends up being up to the dealer to make adjustments to the actual purchase price to reflect those complexities. Tesla doesn’t have any of that, because they don’t have franchised dealerships. This is yet another benefit of their distribution system. So Tesla can better control pricing without having to resort to relying on the archaic practice of dealership by dealership negotiations to account for these differences.

You make a valid point. Not all dealers are equally efficient (and not necessarily because of “wastefulness” – things like being located in a big city obviously makes it possible to be much more efficient than if you are serving a rural area, and being served locally obviously provides real value to the customers), so even if they pay the same for the car it doesn’t mean their cost is the same. And I am not even sure they all pay the same for the same product, especially if shipping is included. Presumably it is less costly for the car maker to administer a large dealerships that buys 200 of a car in a single order than one that orders 2 cars at a time. Not to mention delivering them.

Taser54 — If you really must buy at a discount, you have a number of choices:

1) Buy low mile CPO
2) Take advantage of one of the referral deals when they are available.
3) Buy a demo vehicle with low miles
4) Buy an inventory vehicle that stores use to let customers look at different vehicles and options in person.
5) Buy a vehicle that was damaged prior to delivery and was repaired to factory specifications (by the way, the happens ALL THE TIME in the automotive industry, and lots of car makers simply repair it and never disclose to customers — google it).

The reality is that habitual Tesla bashers like you will never buy a Model S anyways, so all of this is intentionally brainless whining about a fictional purchase that everybody knows will never actually happen.

You might as well be whining about how you don’t like how hard the seats are at the salesman’s desk at the McLaren dealership when buying a McLaren, or some other fantasy purchase you will also never make.

Ahh the personal attacks from Nix when he simply disagrees with a person. Posts like that don’t show much maturity at all.

Seriously, you offer buy a used Tesla as a solution? That is not a solution for a new car shopper, nor is it a cure to Tesla’s full MSRP business model.

Thanks for living up to my insults. Because you just proved my insults 100% correct with yet another brainless reply.

Not only do you ignore the other 4 ways I listed, buying a very low mile CPO car has always been an option to buying new ICE cars ever since CPO programs were invented. You can get a nearly new car for less than new, with a longer warranty.

But tell us all again when you are ever going to buy a Tesla Model S, so we should care at all about your endless crying and whining?

Again with the personal attacks? Mind the terms of service here.

I responded to your first and supposedly best point as you chose to lead off with it. Seeing as it was such a bad point-buy used- I didn’t bother wasting time on your other points. If you can’t organize your argument correctly, why should I bother?

If you don’t like having your posts that contain whining being correctly identified as containing whining, by all means, go whine and cry to the mods about the TOS.

It just validates everything I’ve said about your posts being full of whiny crybaby baloney that fails to actually intellectually honestly deal with the facts and content on this site.

Which brings me back to YET AGAIN your intellectually dishonest failure to deal with my list of 5 ways to purchase a Tesla below price.

But since you have admitted you are incapable of reading past the first of 5 clearly marked points, you will never have the intellectual honesty to admit you are wrong, and that there are plenty of ways to buy a Tesla at a discount.

No, I’m not going to post them again, just because you were either willfully incompetent at reading, or you willfully blinded yourself to everything past the word CPO. Your failure to read is not my fault. Stop whining like it is and man up to your own failure to read.

The so-called “Voice of Reason” apparently wants to re-litigate this. So here is the argument:

From Taser54: “Ah the Tesla business model, no discounts”

List of ways to buy a Tesla at a discount from Nix:
“1) Buy low mile CPO
2) Take advantage of one of the referral deals when they are available.
3) Buy a demo vehicle with low miles
4) Buy an inventory vehicle that stores use to let customers look at different vehicles and options in person.
5) Buy a vehicle that was damaged prior to delivery and was repaired to factory specifications”

One position is empirically true, the other is not. Very simple.

Ah the Tesla business model, super high used Tesla car values which are great for its customers.

They do have the $1000. Referral program credit that has been going on for a while. There is also the $7500. Federal credit and other State incentives. These do provide discounts below retail. I am sure there is also a lot of flexibility in demo vehicles if you don’t want to pay retail.

A $1000 reward to encourage Tesla customers to promote their cars to other potential buyers isn’t a “discount” on sale price; it’s an after-the-fact reward for promoting sales.

And the up-to-$7500 tax credit for buying an EV is not a Tesla discount. Even if you choose to describe that as a “discount” rather than a tax rebate, Tesla doesn’t have anything to do with it.

Wrong! It is a discount of sales price. The referred purchaser also gets a $1,000 discount off their purchase price.

That’s true, so point for you.

And I think congratulations are in order, sven; I think that is the very first time you’ve corrected me on my facts regarding Tesla Motors and its cars.

So for those keeping score, that makes it… what? About 5000 to 1? 😀

It is both.

$1000 of purchase to the buyer.
$1000 incentive to the Tesla owner making the referral.

This is why I hate pedants. Who cares if the rebates aren’t technically discounts. At the end of the day all the consumer gives a **** about is how much the final amount of money they ‘lose’ is.

Who cares? Well, let’s see:

1. Elon Musk

2. All the Tesla employees receiving Elon’s e-mail

3. The InsideEVs readers who have posted 117 comments to this article

4. Many of the hundreds (or perhaps thousands) of people who read this article but didn’t post

5. The post-er who goes by “Will Davis”. If he actually didn’t care, he wouldn’t have bothered to post… now would he, hmmm?

That Fed $7500 is not a discount at all.

Ask anyone who has purchased an EV show you on the purchase agreement where the -$7500 Fed is in there. I dare you!
Down payments don’t count towards the $7500 like some people thing. Everyone who finances their purchase, finances that in the loan at point of sale.

Also, not everyone actually qualifies. Unless they changed it…….lol

If I ever want to buy an EV I don’t care if the rebate is classed as a discount or not. All I care about is how much money I end up with at the end of the month. Stop messing around with semantics.

You have obviously confused semantics with “something I personally don’t care about.”

I suggest you look up the definition of “semantics”, because you’re using it wrong.

I don’t buy this for one second. I believe that there is absolutely zero chance of stores going rogue on discounts. Here’s what I believe went down… (1) They were behind their goals for Q4 and needed to sell more cars to either hit a sales target that they were about to miss, or exceed a record that they were close to breaking. (2) They looked at production and found that they had four models that they could push out quickly at a discount by end of quarter with very minimal hit to margins. These are the S60, S60D, S75, or S75D. There also the same potential with X models in the same battery capacities. Because the the 60 and 75 cars are basically the same, minus the software to unlock capacity, they realized that the best approach was to discount the 75 models to be close in price to the 60 models. The cost of production is identical, and the only risk to discounting a 75 to the price of a 60 is that you don’t have the ability to upsell someone in the future to unlock the extra capacity. This is a future play to profits and I… Read more »

Jonathan B said:

“Here’s what I believe went down…”

You can choose to believe anything you like, but in absence of evidence, it’s nothing but pure speculation.

There weren’t any “66k” Model S’s, after “discounts”. Of the ~500, there were very few reaching the full discounted $8,500, of the unlocked option. Again, other options were stuck on, calling for even more cash flow. Discounted prices were far above Model 3 configurations (likely 40-45+).

I see where you’re coming from, but there’s a long way to go before 59k, when this batch of “discounts” for the most part fetched 72k or more. The $1,000 referral program is a wild card, expiring on 10/15. Do they renew?

If Musk is serious, a 64k base price “60” or favorable 2-year lease terms will probably come, if he doesn’t raise the capital needed for M3 tooling.

My point is that there’s no different in cost to Tesla between an S60 and an S75 because both have the same 75kwh pack in them. So selling an S75 at a discount is the same profit margin as selling an S60, especially when you figure in that they have no idea how many people are willing to pay the extra $9K to “unlock” the capacity in the future. My guess is that maybe 10% will, and even at that, they can’t justify $9K for 10-12kwh of capacity forever. At some point that will have to drop in price, so if they can sell an S75 for a $6500 discount, they actually made $2500 extra in profit and don’t take the gamble on the unlocked capacity. Furthermore all that is necessary to roll either car off the line is swapping the badge on the back of the car. My second point on the $59K price isn’t to imply whether its not still a big jump from a Model 3 to a Model S, it is to point out that I think there’s enough value in a sub $60k model S at 75kwh range, that I would be willing to make… Read more »

Jonathan B said:

“My point is that there’s no different in cost to Tesla between an S60 and an S75 because both have the same 75kwh pack in them. So selling an S75 at a discount is the same profit margin as selling an S60…”

No, it’s not the same profit margin. It’s the same profit margin only on the selling price, not the long-term expectation Tesla has for income from selling the car. You can’t dismiss the possibility that any buyer might pay to upgrade the S60 to an S75. It’s true that, as you say, Tesla can’t be sure how many people will upgrade. But Tesla can be sure that every car upgraded at a discount is lost income for Tesla.

Of course, logically there is a counter-argument: That some or all of those sales may have been lost if the Tesla rep didn’t “sweeten the deal” by offering a discounted upgrade. But Elon has a valid point: Tesla has a “no-haggle” reputation to protect, and sales reps offering “a deal deal” on those upgrades is contrary to, and potentially damaging to, that reputation.

A bit of a ramble-thon, but I can tell you one thing, the stores themselves didn’t go rogue.

The discounts were offered (at least in my friend’s case) by a call from Tesla California to purchasers informing the buyer that there was a “very similar” car already in inventory that could be delivered by the end of the month. At that point, discounts were offered as an incentive for the buyer to take the similar, inventory car…

My buddy called his local store and asked about the discount. The manager told him to come in. He was offered an S75 with the $6500+$1200+$1000 discount if he took delivery by end of month. He passed because the car had far more options than he wanted and drove the price up too much.

Now that is believable. +1

Just provisioning a 60kWh S to order on teslamotors.com would cause a “substantially similar” 75kWh car to pop up as available with (IIRC) about a $7500 discount.

Yeah, the litmus test will be when the market becomes saturated, the battery factory is running full speed, and cars begin piling up on lots.

Store directors will have to use corporate offers to push more product: free maintenance for x years or even life, free accessories coupons, free supercharging, etc,.

Another big area for adding discounts to the bottom line without moving MSRP that I haven’t seen mentioned before here is simply giving way more for trade-in vehicles.

Tesla Motors does not deal with trade-ins, period*. Their CPO program does, but that is actually handled by a separate company.

*Exception: I think that in China, they do deal directly with trade-ins.

“Tesla Motors does not deal with trade-ins, period*.”

Things change. I’m referring to the future.

And many people believe I like to dance naked in the rain while wearing a pink hat. Doesn’t make it true though does it?

Fact: I don’t actually do the above.
Fact: I don’t know anyone who actually believes that.

The point is, you can ‘believe’ you know what goes on inside Tesla all you want. Chances are you’re totally wrong. People just love to think they know best.

Elon is full of ****. No employee would sale at a discount without approval from the top. They just opened Pandora’s box.

Perhaps you should write a letter to Wells Fargo and tell them that no employee should open accounts in clients names without permission.

No employee would do that, eh?

No human being would willingly put their hand in an alligator’s mouth. Nobody is that stupid.

Oh wait. It’s been done already. Many times by various people.

How could you POSSIBLY know what each and every Tesla employee has done? Answer: You couldn’t. So what qualifies you to speak for every employee? There’s a perfectly reasonable chance that various Tesla employees have indeed done exactly as Elon claims.

Well said, sir.

And nobody could possibly be stupid enough to try to grab a live rattlesnake and put it in their mouth, either.

Oh, wait…

http://www.huffingtonpost.com/2012/11/19/rattlesnake-republic-expe_n_2157315.html

“Elon is full of ****. No employee would sale at a discount without approval from the top. They just opened Pandora’s box.”

Or that now Q3 target is met, we can close that Pandora’s box now… =)

Convenient how Musk “suddenly” got wind of the “improper” discounting AFTER they achieved their quarterly sales goal.

“Bad, bad sales advisors!” *wink*

Ya, that’s what I got out of it, too.

Wink, wink.

Another Euro point of view

… 🙂 anyway, this is immensely entertaining to read and as I read EV news after work for relaxation Elon never fails on me. I hope this carry on for years to come.

Heisenberghtbacktotherootsandnuts

I too read it for the relax thing.

Sometimes however I feel a little bit bad hearing that others get paid for commenting, they also should relax a little more 😉

It seems that Europe contains the last two humans who just read and post for entertainment. And while the rest of the community are paid professionals, chatbots, “The holy Elon himself!”, paranoid androids, and conspiracy theorists it is always entertaining and my personal legal crack!

Goodbye!

I don’t know. That post sounded pretty uptight. It is almost a rant towards the end.

Maybe try some yoga? A nice relaxing tea?

“Everyone in the world is quite mad, except for me and thee. And sometimes I have my doubts about thee.” — paraphrase of a quote from Robert Owen, 1828

Beyond the winking, I think it makes a price change more likely. Even if I don’t question what he knew, he seems to have doubled-down on not letting things go this way.

It all makes me more curious how Tesla’s configuration page will look, on October 1st.

If they are selling all they can manage to produce at list prices, what’s the point of discounting? Are there indications that that is not the case? Do they have an inventory of 1000s of Model S sitting around? That’s not the impression I get. And the fact that used Model S prices are staying quite high in the open market shows that they are able to maintain prices. No point in lowering prices until real competition arrives.

Steve Strange asked: “Are there indications that that is not the case?” It’s just my opinion, but I think Tesla offering the new S60 and X60 trim levels are an indication that they can now make more than they can sell. That is, Tesla is currently not production limited, but is demand limited. If you think about it, this is to be expected in the current situation. They’re getting ready to ramp up production as fast as possible on the Model ≡, and realistically they can’t possibly ramp up to meet demand as fast as they’d like to. So it makes sense to start ramping up production capacity ASAP, to do as much of that now rather than waiting until they can actually start producing the Model ≡. Sure, there will be stations on the production line which will be specific to the M≡, and there’s no point in building those stations yet. But there are other parts, say the painting rooms, where they might as well build them now, rather than waiting for the Model ≡. With increased capacity on parts of the production line, the potential throughput increases, leaving Tesla with what likely will be excess production capacity… Read more »

Steve,

FYI — Tesla has a total of 115 Model S Inventory cars across the United States, with a median age of just 8 days old (9/21 listing date).

That would be a fraction of 1% of their total sales target for this fiscal year. It is basically a rounding error on sales.

Elon is posting to two groups simultaneously: employees and consumers. Vagueness in policy or rumors about unsanctioned sales practices are not tolerated. Clarity and fairness are to be the standard. And his communication on the matter makes that crystal clear, from this moment forward.

That’s it in a nutshell. I don’t believe for a second the ‘permission to discount without permission’ conspiracy nonsense.

It’s crystal clear until the next quarter Tesla needs to hit a sales target right before a capital raise. The “do anything to reach an end-of-quarter sales target” mantra at Tesla sounds very Wells-Fargo-esque to me.

Typical Tesla bashing post from a serial Tesla FUDster.

If a (hopefully) few Tesla sales reps were offering unsanctioned discounts on Tesla cars, that’s certainly not committing fraud, nor is it forcing the customer to pay more than he agreed to, as Wells Fargo reps were.

Just like the Wells Fargo CEO, Tesla’s CEO claims he didn’t know anything about the shenanigans going on, even though it has been widely reported on the internet for a while now.

I presume you are referring to FUDster claims that Tesla cars are “sold at a discount” as fleet sales, or on some mysterious gray market, are frequently repeated in anti-Tesla basher posts over on Seeking Alpha, which apparently you spend a lot of time reading.

The fact that this actually turned out to be true in what is apparently just a few cases, after literally years of false claims by Tesla bashers, is certainly no evidence that Elon “must have known about it all along”.

That’s like claiming the villagers in the story “The Boy Who Cried Wolf” must have actually known there really was a wolf eating the sheep, because the little boy cried “Wolf!” a third time.

And in the case of anti-Tesla FUDsters, those not-so-little boys have cried “Wolf!” many, many, many more than three times.

Yea, just look at all the customers that suddenly owned a new Tesla without even asking for it.

Very clever PR move from Elon – but also more than that. I think he is absolutely right that the ingerity of the company, and people trusting it to do the right thing, is exceptionally important. This kind of thing makes even me – who is somewhat cynical by nature and have my doubts whether Musk wants Tesla to do the right thing because of moral convictions, or simply wants it because it’s the best business strategy – believe a bit in the hype. I have far more respect for someone who takes a stand for the right reasons, and then fails to come out on top, than for someone whose reasons are nothing more than justifications of whatever they see as required to get to the top. Maybe Tesla really is different at its core, not merely innovative..? I still find it difficult to believe. It is a publicly traded company. It’s board of directors decide what the goals should be, and the strategy for getting there, not the CEO. The board is elected by the shareholders, and we all know what motives shareholders have. And, of course, the board decides who should be CEO. It is therefore difficult… Read more »

Agreed. That is essentially my exact assessment of the situation, Tesla Motors and Musk.

On your observation of his nerdiness being a supporting factor – in general, it is true that people are people. However, it is also true in the scientific fields (including the medical field), that if anyone has cooked their data, they are chastised and quickly become pariahs in their field. Most never regain the trust that they broke, and some are even forced to leave the field…lose their chairs at universities, lose funding, get fired, etc.

The same can be said of engineers – if a vehicle is flawed, causing deaths, the engineers generally feel terrible about it and take personal responsibility and are often the whistleblowers. However, if the problem doesn’t get fixed, it’s usually not the engineers’ fault – it’s the decisions from above that determines whether the flaw is fixed or whether the company would rather pay off the wrongful death suits.

These levels of integrity are a big reason why I am proud to be part of both the scientific and engineering communities.

True. Although occasionally we see the reverse. Remember how it went over at Harvard when Lawrence H. Summers, its then-president, dared to comment that the under-representation of female scientists at elite universities may stem in part from “innate” differences between men and women While it is easy to see the inflammatory potential in this, Summers was making a point supported in research. It is not that women are, on average, any stupider than men. But there are several studies that find men’s IQ to vary more than women’s. Hence idiots and geniuses are both more commonly male than female. And that is certainly one of several possible causes that would explain the underrepresentation of women. I don’t know if Summers had an important point, but that is a scientific question. But Harvard would have none of the scientific discussion, all too obvously because of how its sponsors felt about it. Concerns over political correctness quickly overruled any concerns about free scientiic inquiry, and Summers was Summarily Fired. 😉 As for the nerdy thing, my thinking is perhaps too simple, but it goes like this: Nerds tend to be very intelligent and very curious. Their curiosity is what causes them to… Read more »

Personally, I think it is bigger than just doing what is best for Tesla. I think Musk truly believes that the entire automotive industry needs to be revamped and moved into the modern era. And that he believes that Tesla can prove by example that not only can they build a better car that will force other car makers to compete, but that they can build a better sales model too — revolutionizing the automotive industry.

The vast majority of TSLA stock owners are institutional investors, who continue to accumulate shares. They seem very happy to let Elon be Elon, so I don’t think he has to worry about an Activist Investor revolt any time soon.

Maybe. But he also believes that a million people will soon live on Mars. 😉

(I’m just kidding. The discussion revolved about judging whether or not his professed beliefs are genuine, and whether his beliefs are realistic or even plausible have no bearing on this.)

Well, Tesla marketing and bean counters, and the capital markets, all have to realize that sales growth for Model S is probably going to be small. They already saturated the luxury sedan market by beating the previous market-leader, the M-B S-Class sedans, in NA and Western EU. That says to me that Model S is about where it’s going to stay.

Model X sales have room to grow, obviously, but given the unique tradeoffs that the vehicle represents, plus these major first-year quality problems, it is very possible that the X might not ever be a market leader in the luxury SUV market.

Yup, I agree. Tesla has always planned for the Model 3 to be their mass market sales vehicle, dating back to before they even built the Roadster, and called the Model S the “Bluestar”. The Model S has always been a premium, smaller production number vehicle.

The dump below the cost to make good looking Q3 delivery number officially ended just as Q3 is ending, what is not clear here? Maybe it will result in horrible Q4 revenue, but who cares, billions will be (hopefully for Musk) already raised before Q4 results.

Musk already told employees that Q4 2016 through at least Q1 2018 will be negative due ONLY to future investment costs for the Model 3. Because no matter what you guys say, future investments into future product lines absolutely do impact quarterly results.

Do we have to go back and prove that fact to you again? Do you need me to quote it all back to you yet another time, or has that finally sunk in?

zzzzzzzzzzzzzz said:

“…what is not clear here?”

It may not be clear to casual readers of InsideEVs that you’re a serial Tesla basher and a shill for Big Oil; one who will literally say anything in an attempt to damage Tesla Motors’ reputation, regardless of how false it is.

But it’s very clear to everyone who regularly reads the comments here.

Actually from the sound of the email, it looks like Tesla is on track to deliver what Elon wanted if this is the best Qtr or on track to best QTR ever.

So, maybe it is time to buy TSLA stock before the earning announcement.

Why do you think Elon bundled the sales news with the instruction to adhere to pricing policy..?

Obviously to get the word out about Q3 sales. It need not mean much at all – there could be some lender who is about to make Tesla an offer for all we know – but Elon can now say it was important to *publicly* show Teslas commitment to the policy and their integrity, and the other sales stuff was just thoughtlessly out in the same email. Not that many who realize how smart Elon is would fall for that! I bet he thinks a fair bit about most of his tweets, and certainly ones that provide hints about results or sales or production. Shareholders are jumpy creatures and I believe you’d learn to hold your tongue pretty quickly in his position!

Or it could be viewed as “now that we are on track to hit the target, we can stop that practice now”… =)

Either way, it looks like that Q3 is on track. That should help the next round of fund raising and maybe it will somehow boost the chance of TSLA buying SCTY.

Now let the media anti Tesla campaign begin in earnest. Fully 4 to 1 against Tesla articles are hitting the internet daily.

It’s sort of funny and sad at the same time, and I think Musk probably knows that even negative articles keep Tesla in the news, which is exactly what he wants. Just watch as the flurry of articles dies down, Musk will announce something and start a new frenzy. He’s plays the media like a fiddle, even though on the whole they are down on Tesla.

ffbj said:

“Fully 4 to 1 against Tesla articles are hitting the internet daily.”

Well, perhaps that’s true if you count the investor advocacy blog posts on Seeking Alpha, Motley Fool, and similar forums.

But I rather doubt that’s true if you ignore those few places. Most of the articles (actual articles, not investor blog posts) which I find via Google News, are positive or at least neutral about Tesla.

Now, admittedly those Seeking Alpha and Motley Fool blog posts do tend to come up in the first few “hits” on Google News, so I suppose a lot of people are reading them. In that respect, if you count how many times each one is read or at least glanced at, then perhaps your “4 to 1 against” ratio is about right.

Sturgeon’s Law: “Ninety percent of everything is crud.”

This is clearly a fake email – it’s not from elontesla@yahoo.com.

What is quoted is Twitter posts, not e-mail posts.

Already Tesla cars are sold at an affordable price, why should they give discount. You can never buy a 7 Seater luxury car for 66K.