You are here
Tesla offers incentives in rush to boost deliveries
TESLA INC is offering incentives and tapping an army of brand-loving volunteers in a frantic push to boost sales and deliveries before the end of the quarter.
If the final days of the second quarter were all about trying to prove to investors that Tesla can ramp up output of its mission-critical Model 3 electric sedan, then the third period is about getting the cars out the door fast enough to drive up revenue and move the money-losing company toward profitability.
Chief executive officer Elon Musk was at the company's delivery hub in Fremont, California, on Saturday, according to a customer's tweet, while many long-time Tesla owners are heeding his call to volunteer at local delivery centres. The volunteers are answering questions from buyers picking up their new vehicles whom Tesla staff are too busy to handle.
To quicken the pace of sales, the company is also offering US$100 credits toward charging - or in some cases free charging - at Tesla's network of stations. One shopper even said he was dangled a discount of US$3,000 on a Model S in inventory.
Tesla did not immediately respond to a request for comment on its end-of-quarter push.
While quarter-end discounting isn't necessarily new at Tesla - and the incentives aren't big by auto-industry standards - there's a greater urgency behind the effort now because of the pressure Mr Musk is under to deliver on his promise that the company will start generating profits in the second half of the year.
The CEO is scrambling to post a strong third quarter while he simultaneously has been forced to deal with controversies much of his own making.
The Department of Justice opened a criminal investigation and the Securities and Exchange Commission started a civil probe into Mr Musk's Aug 7 tweet about possibly taking the company private.
Tesla also fired more than 3,000 employees in June and has lost several high-level executives recently, including a new chief accountant, who departed after only a month. Mr Musk also puffed on a joint during a YouTube interview with comedian Joe Rogan, distressing some investors.
Mr Musk alluded to the pressure the company is under in an email to employees published as a blog post on Sept 7. Tesla "is about to have the most amazing quarter in our history, building and delivering more than twice as many cars as we did last quarter," he wrote. "For a while, there will be a lot of fuss and noise in the media. Just ignore them."
In the August letter to shareholders, Mr Musk said the automaker expects to become both sustainably profitable and cash-flow positive in the second half of 2018 for the first time in its 15-year history.
Tesla delivered 18,449 Model 3s in Q2, according to the shareholder letter, and said in July that 11,166 were in transit to customers.
Goldman Sachs analyst David Tamberrino, who has a "sell" rating on the stock, estimates third-quarter Model 3 deliveries of about 52,000.
Long-time Tesla owners want to be part of what they see as a historic moment for the Palo Alto, California-based company.
Omar Sultan - who lives in Elk Grove, California, and drives a Model S - has organised shifts with other owners in the region and helped out at the Tesla store in nearby Rocklin. They have plans to do so again this weekend.
"We're complementary to the Tesla employees," said Mr Sultan, whose wife drives a Model X and whose son will get a Model 3 as a college graduation present next year. "A lot of people getting the Model 3 are buying an electric car for the first time, and they have a lot of questions about charging that we're happy to answer."
Here are other ways Tesla is trying to drive sales as the quarter draws to a close:
- Mr Musk tweeted on Monday that Tesla has run into an "extreme shortage of car carrier trailers" and has started building its own.
- Some Tesla reservation holders received emails that offered "a limited number of Model 3 Rear-Wheel Drive vehicles on display that are available for immediate delivery".
- Tesla owners can grant "free Supercharging for life" to a friend who buys a Model S, X or 3. The perk was originally supposed to end on Sept 16 then was extended. Some owners say their referral code now gives a US$100 credit. The potential customer who got the US$3,000 discount offer said he was told if he took delivery of a Tesla before month-end, he also would get free supercharging for life.
- Over the weekend of Sept 8-9, Tesla hosted an "exclusive delivery experience" at its Fremont hub. "As a future Model 3 owner in the Bay Area, this is your opportunity to come pick-up your Model 3 this weekend," said an invitation posted on the Tesla Motors Club forum.
In July, Tesla said net Model 3 reservations at the end of Q2 were roughly 420,000. The number is constantly in flux as vehicles are delivered, people place new orders and some reservations are cancelled, raising questions about demand and what the true backlog is.
Tesla will report Q3 production and delivery figures in early October. BLOOMBERG