Electric automaker Tesla Motors Inc. CEO, Elon Musk informed workers in an e-mail to follow business policy of not providing discount rates on new vehicles, reacting to some investors’ issues about the practice.
In a Twitter message, Musk said “corrective action” had been handled discounting of new cars, that “seems to be limited to a small number of cases”.
Musk’s e-mail to staff members was included on Wednesday in a reaction to discuss a Reddit publishing of someone questioning the discount policy.
The Tesla boss stated, “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 10 years ago.”
Musk stated there could be discount rates to floor designs, cars that had been used for testing or those that were harmed in delivery.
“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,” he stated. Musk was reacting to a research note published on Tuesday by expert Brad Erickson of Pacific Crest Securities that criticized Tesla for providing discount rates on Model S sedan stock cars, not those built-to-order for specific clients, to improve third-quarter sales.
“We discovered Tesla has been employing a much deeper discounting formula to drive sales of inventory designs, with all offers expiring this Friday, the last day of the quarter,” Erikson added.
Erickson stated he discovered aggressive Model S marking down at U.S. sales centers to take full advantage of third-quarter deliveries.
Deliveries for the quarter will be around 22,000, stated Erickson, up 90 percent from 2015.
Mike Ramsey, automobile expert with Gartner Inc., stated discount rates on Model S cars have some, and that it was “inevitable” that the car, which debuted in 2012 and typically costs $100,000, would eventually discounted.
