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DaveT, Editor (subscriber count: 2200)

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Elon puts an end to new car discounts

For the past few weeks Tesla has been selling new cars at a heavy discount (as I shared in my last edition newsletter). These cars were never-driven new cars directly from the factory and they were oddly classified as “inventory cars” by Tesla. Typically “inventory cars” are showroom or loaner cars that have been a decent amount of miles and age on them and thus Tesla is able to justify a discount. Recently though these new never-driven cars from the factory were getting discounts of $6.5k-12k off. It appeared that Tesla had changed their “no discount, no haggle” policy and was becoming more like a traditional dealer.

However, this past week Elon took to Twitter and discovered that these new car discounts were happening. He then wrote a letter he tweeted that re-affirmed Tesla’s previous “no discount” policy. What’s strange about all of this is that it appears that Elon didn’t know about the heavy discounts on new cars that were being given on Tesla’s website and in all the showrooms in the U.S. Perhaps Elon was busy, or perhaps there was a miscommunication and misunderstanding among Tesla management. Whatever the case, I think Tesla would be well-served if they hired a competent Chief Operating Officer (COO) that could take some of the operation oversight off of Elon. This would allow Elon to focus more on his CEO roles of new products, strategy and vision. As Tesla grows even further, especially with the acquisition of Solarcity, it will become even more crucial to have a competent COO that can manage Tesla’s growing diversity of business lines.

On a side note, Tesla’s 3rd quarter is ending today and Tesla will announce the total number of delivered cars in the quarter by Oct 3rd. Investors will be keenly awaiting the numbers as it will show if Tesla can show profitability before their pending capital raise in Q4.


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