Tesla is going through a challenging period. As the Austin-based company has experienced a historic drop in deliveries, salespeople are demanding a change in the sales strategy. Could it be time for the company to rethink its sales model? Some employees even think the brand should take inspiration from traditional automakers.
Plummeting Sales and Demotivated Sellers
In July, Tesla reported a decline in deliveries for the second consecutive quarter, an unprecedented situation. This decline has caused Tesla’s market share in the United States electric vehicle market to drop below 50% for the first time. Faced with this major challenge, Tesla’s sales strategy is being put to the test. Several sellers believe that it is time for the company to review its business model.
Our colleagues at Business Insider collected testimonies from 14 current and former Tesla employees in North America. Their statements shed light on what we can infer from the outside. The brand must transition from a model where demand comes to it, to one where the company actively seeks customers.
Price reductions or other sales team reorganizations have not yielded results. The competition is becoming increasingly fierce. Traditional automakers are waking up, and Chinese manufacturers are entering the market. Not to mention the negative publicity surrounding Elon Musk, which surely complicates the situation. These various phenomena are prompting sellers to speak up. They are concerned and believe that the brand must make major changes if it hopes to turn things around quickly.
Can the Direct Sales Model Endure?
For a long time, Tesla has favored a direct sales model, without dealerships or advertising. However, this unique approach is starting to show its limitations. American sellers believe it is time for Tesla to adopt more conventional sales methods. The number of customers capable of buying a car online with just a few clicks may not be as high as initially thought.
A brand seller explains that “Tesla’s philosophy is simple: the product should sell itself.” But today, that is no longer enough. In 2022, Tesla had tried to hire salespeople with a more traditional sales experience, a change welcomed by some managers. However, the “absence of commissions” demotivated most of them.
Sellers Worried About the Future
To adapt to the decline in sales, Tesla is still trying to respond. Since March, sellers have been asked to offer a demonstration of the FSD, the autonomous driving software. This measure is intended to convince customers of the benefits of the technology developed by the company. According to testimonies collected by Business Insider, this new measure has been a “source of frustration for some sellers and customers.”
Over the years, Tesla has created confusion within the sales force. In 2019, the automaker decided to merge sales and delivery roles to “streamline the customer experience.” This decision was reversed in early 2023 to allow sellers to focus on their relationships with customers. Ultimately, after a workforce reduction in April 2024, Tesla changed its mind again.
Contrary to what one might think, regular price drops also worry sellers. While this strategy indeed stimulates short-term sales, it also encourages some customers to adopt a wait-and-see attitude, hoping for further discounts. The result is that the company is currently facing overproduction.
Perhaps It’s Time to Change the Sales Model
Salespeople believe that Tesla must adopt more aggressive sales techniques to reach a wider audience. They also think that “the brand’s aging range” does not help in convincing new customers. The latest model is the Cybertruck, but it is a niche vehicle. Launched in 2020, the Model Y is Tesla’s most recent vehicle (excluding the electric pickup).
Other vehicles have only undergone “minor updates,” according to sellers. But Elon Musk has other ideas in mind. He wants to position Tesla as a technology company, focusing on artificial intelligence and robots. He has mentioned the possibility of a new business model by 2025, without providing concrete details. This is likely to unsettle sellers!