Last month, Tesla CEO Elon Musk sent a company-wide email to employees in which he urged them to “build and deliver every car they possibly can” since the company was on the “razor edge” of profitability.
Today, a month later almost to the day, he sent another company-wide email, but this time to congratulate employees on what he describes as “likely the best ever [quarter] in the Tesla history”. But he also added a reminder not to give discounts on new cars.
Earlier this month, we reported that Tesla was in a full ‘end-of-the-quarter push’ with more inventory cars and buyers reporting unusual discounts.
In an email he shared on his Twitter feed, Musk reminded employees of the importance of Tesla’s fair price policy that everyone should pay the same price for the same car:
“That said, it is absolutely vital that we adhere to the no negotiation and no discount policy that has been true since we first started taking orders ten years ago. This is fundamental to our integrity and we maintained this policy even through the terrible depths of the great recession of 2008/2009.”
He clarified when it is OK to give a discount and when it is not:
“It is fine to have a discount on cars that have been floor models , were used in test drives or were damaged before delivery. All we are doing there is assigning an accurate price to the vehicle. However, there can never — and I mean never — be a discount on a new car coming out of the factory in pristine condition, where there is no underlying rationale. This is why I always pay full price when I buy a car and the same applies to my family, friends and celebrities, no matter how famous or influential.”
Tesla often offers discounts on inventory vehicles, but those have significantly increased in the last few weeks ahead of the end of the quarter, which is Friday. And other new buyers have reported having their destination fees waived on new cars and even some options for free in order to close a new sale.
Musk claims to not have been aware of those practices and after having investigated the issue today, he came to the conclusion that it was “limited to a small number of cases worldwide”.
Here’s the email in full:
As for the part about being the best quarter in Tesla’s history, it’s not clear if he is only talking about deliveries or profitability. In late August, Musk saw a possibility for GAAP profitability, which would be a first in over 3 years for Tesla.
But if he is only talking about deliveries, it would be less impressive. Tesla’s delivery record is 17,400 vehicles in Q4 2015. The company was already expected to beat that in Q3 and Q4 2016 since it has been guiding deliveries of 50,000 cars during the second half of the year.
Tesla is expected to disclose its delivery results for the third quarter next week and its financial results during the first week of November.