Tesla needs to figure out how to sell cars. Its salespeople say it needs to act like a typical car company
Once, Tesla raced to produce enough cars to meet demand. Now the company is scrambling to find customers to buy them.
Tesla's delivery numbers slumped for the second straight quarter in July — dropping below 50% of the U.S. EV market share for the first time in the company's history.
The company's sales team has been struggling to adapt to a much different market, according to 14 current and former employees from Tesla's sales division in North America. The sources, whose identities are known to Business Insider, spoke on the condition of anonymity because they were not authorized to talk to the press.
Over the past 24 months, the company has offered discounts, reorganized its sales teams (and then backtracked on its reorg), repeatedly shifted sales goals, and vacillated between offering commissions to salespeople and threatening their jobs with performance-improvement plans.
None of it is working.
Tesla is facing weak consumer interest in electric cars and increased competition from other automakers, particularly as it attempts to position its dated vehicles against newer, less expensive models from rival legacy manufacturers and cheaper Chinese upstarts. The carmaker is also attempting to fix a spate of bad publicity surrounding its CEO, Elon Musk — all with little in the way of advertising initiatives or traditional sales strategies.
The electric-car maker made its mark by breaking industry standards with its ad-free, direct-to-consumer sales model. Now, some of Tesla's sales staff believe it's time for the company to begin acting like a traditional automaker.
"Tesla is at an inflection point," a former manager, who worked at the company for several years, told Business Insider. "It's time to throw out the old manual. What's worked in the past won't work now."
'The product should sell itself'Unlike Tesla, most traditional automakers operate on a dealership model. They farm out their sales to third-party franchisees who are heavily incentivized to offload the product using a variety of tried-and-true tactics, including promotions, financing offers, add-on products, staff commissions, and sales events.
In contrast, Tesla keeps most of its inventory off-site, maintains a haggle-free pricing strategy, and relies more heavily on online sales. Its showrooms are more for educational purposes than selling. At one point in 2019, Tesla even briefly got rid of its sales team entirely, selling cars solely online.
"The idea is simple: The product should sell itself," one sales advisor said regarding Tesla's strategy. "We act more as guides than salespeople."
The ideal sales advisor is a person with a significant interest in tech and a passion for Musk's mission — having a sales background is a nonfactor, five workers said. In fact, Musk has made it clear that Tesla's sales advisors shouldn't have anything in common with the stereotypical "slimy salesperson" at traditional dealerships, one worker said.
That strategy began to flounder in 2022. At that point, Tesla hadn't released a new model in years and had only made subtle refreshes to some of its other vehicles. Waiting lists dried up and production began to outpace delivery. The product wasn't selling itself anymore.
Changing tacticsThree current and former managers told BI that if Tesla wants to move cars off the lot, it needs to ditch the advisor model and hire experienced sales staff.
The company took a step in that direction in 2022 when the sales team began hiring workers with more traditional sales and automotive experience, the workers said. Several managers said they welcomed new hires who could turn curious visitors into buyers.
"We needed people with more of a hunter mindset," one worker said.
But if Tesla wants salespeople to hunt, it also needs to incentivize them, some managers said — namely via commissions. Tesla had largely avoided commissions since the Model 3's 2017 launch, with salespeople relying instead on annual reviews for salary increases. Three workers noted this approach did little to motivate deal closures or boost car sales.
Tesla started experimenting with rewarding high-performing salespeople in 2023, offering $25 to $100 in commission for each Model S or X sold, three workers said. (For comparison, at a traditional dealership, salespeople can bring in much more — usually earning anywhere from 20% to 40% of the profit). That initiative fell flat for some: Several workers said they were never paid, as the commission was dependent on the region hitting at least 90% of its overall goal. Tesla stopped offering incentives at many of its locations during the second quarter of this year, they said.
"There's a reason why the majority of sales roles offer commission," one former manager said. "It's because it works. It can't be all stick and no carrot."
Fear is a common motivation tactic at Tesla, seven current and former employees said. Ten workers said they saw their daily sales goals change on an almost weekly basis. When performance reviews were delayed in February 2023, workers' sales targets at some locations skyrocketed, with junior-level staff sometimes seeing their goals double. A former manager said the shifting goals were mainly about hitting quarterly targets, but two sales advisors said these unrealistic expectations demotivated staff.
Those who missed targets often faced performance-improvement plans and eventual termination, four sources said. One former worker said there were days when customers were so scarce it was impossible to meet their targets, making their efforts feel futile.
The company increased sales workers' points of contact with customers. Since the pandemic, Tesla staff had largely been hands-off when it came to customer test drives, but in March, Musk mandated sales workers provide demos of Tesla's Full Self-Driving software for all new buyers. This meant workers would sit in the car with the customer during test drives, which gave them more opportunities to pitch customers on the benefits of owning a Tesla.
Some workers said the mandated FSD demo turned off some customers who weren't interested in the feature and made it more difficult to hit their sales targets, given the additional time the ride-alongs required. Others said sitting in on the test drive gave them more opportunity to develop a sales relationship with the customer.
Tesla merged sales and delivery into one role in 2019, forcing sales advisors to do two jobs at once. Early this year, it reversed course, allowing sales staff to focus more on improving their relationships with customers without the distraction of handling deliveries and logistics, eight workers said. But shortly after Musk announced a 20% workforce reduction in April, Tesla backpedaled again and reconsolidated the roles, the workers said.
In 2023, Tesla started offering price discounts, which ate into profit margins but failed to solve its overproduction woes. Sales staff and managers said the price cuts initially helped bring in more traffic, but it led some customers to take a wait-and-see approach — they didn't want to put their money into something that was rapidly losing value.
Leaving the era of waiting lists behindMusk has waved off concerns that Tesla might be struggling to sell its vehicles. Earlier this year, Musk said his company was "between two major growth waves" and blamed rising interest rates and economic uncertainty for lackluster delivery numbers.
But 10 workers told BI they believe Tesla is still struggling to transition from selling to early adopters to a larger market. While the workers see an advantage to Tesla's in-house sales department and non-predatory pricing model, these workers say Tesla needs to adopt more aggressive sales and advertising techniques, as well as address one key issue: its aging lineup.
Tesla released its futuristic Cybertruck in 2023, but its $60,000-plus price point and polarizing design have made it more of a luxury vehicle than a car for the masses.
Before that, the last new Tesla to hit the road was the Model Y crossover, introduced in 2020. While some individual models have been refreshed, the changes have been so subtle, they're difficult even for Tesla superfans to spot.
"Where are the product updates and facelifts?" Brian Moody, the executive editor of Autotrader, said. "Changing marketing and sales can only go so far if they don't update the products."
But Musk appears to have different plans for Tesla. The billionaire had little to say about auto sales during Tesla's recent earnings call and has continually positioned the company as a tech, AI, and robotics company while downplaying its declining sales and overproduction issues.
Musk has been vague about when a new, more economically priced Tesla model would hit the market, saying only that it could happen in 2025.
Salespeople and managers, meanwhile, are left waiting for something new to sell.
"Every time there's a new product, there's these monthslong wait lists," one former manager said. "We can't be order takers if we don't have new products."
Read the original article on Business InsiderTesla needs to figure out how to sell cars. Its salespeople say it needs to act like a typical car company
Tesla needs to figure out how to sell cars. Its salespeople say it needs to act like a typical car company
Tesla needs to figure out how to sell cars. Its salespeople say it needs to act like a typical car company
Tesla needs to figure out how to sell cars. Its salespeople say it needs to act like a typical car company
Tesla needs to figure out how to sell cars. Its salespeople say it needs to act like a typical car company
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