Tesla is going through a difficult period. While the Austin firm has recorded a historic drop in deliveries, salespeople are calling for a change in sales strategy. Isn't it time for the company to rethink its sales model? Some employees even think that the brand should take inspiration from historic manufacturers.
Free-falling sales and demotivated salespeople
In July, Tesla announced a drop in deliveries for the second consecutive quarter, an unprecedented situation. This fall has caused Tesla's share of the electric market in the United States to fall below 50% for the first time ever. Faced with this major challenge, Tesla's sales strategy is being put to the test. Several salespeople 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 highlight what we can guess from the outside. The brand must move from a model where demand comes to it, to another where it must go and find customers.
Price reductions, or other reorganizations of sales teams, have not borne fruit. Competition is increasingly tough. Traditional manufacturers are waking up and the Chinese are showing their fangs. Not to mention the bad publicity surrounding Elon Musk which certainly complicates the situation. These different phenomena are pushing salespeople to speak out. They are worried and think that the brand must make major changes if it wants to hope to get back on track as quickly as possible.
Can the direct sales model last?
Tesla has long favored a direct sales model. Without dealerships or advertising. However, this unique approach is starting to show its limits. American sellers think that it is time for Tesla to adopt more conventional sales methods. The number of customers able to buy a car on the web, in just a few clicks, may not be that many.
A salesperson for the brand explains that “Tesla’s philosophy is simple: the product has to sell itself.” But today, that’s no longer enough. In 2022, Tesla had already tried to recruit salespeople with more traditional sales experience, a change welcomed by some managers. However, “the absence of commissions” has demotivated most of them.
Salespeople worried about the future
To adapt to the drop in sales, Tesla is nevertheless trying to react. Since March, salespeople have been asked to offer a demonstration of FSD, the autonomous driving software. A measure intended to convince customers of the advantages 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 salespeople and customers".
Over the years, Tesla has created confusion within the sales force. In 2019, the manufacturer had decided to merge the sales and delivery roles to "streamline the customer experience". A decision reversed in early 2023 to allow salespeople to focus on the relationship with their customers. Finally, after a reduction in staff in April 2024, Tesla changed its mind again.
Contrary to what one might think, regular price cuts also worry sellers. While this strategy does indeed stimulate sales in the short term, it also encourages some customers to adopt a wait-and-see attitude, hoping for an additional reduction. Result: the manufacturer is now in a situation of overproduction.
It may be time for a change in business model
Salespeople believe Tesla needs to adopt more aggressive sales techniques to reach a wider audience. They also believe that the brand’s “aging lineup” is not helping to attract 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 car (if you forget the electric pickup).
The other vehicles have only received “minor updates,” according to the sellers. But Elon Musk has other ideas in mind. He wants to position Tesla as a technology company, with an emphasis on artificial intelligence and robots. He has mentioned the possibility of a new business model by 2025, without giving concrete details. That’s not going to reassure the sellers!
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