Tesla has discontinued discounts on inventory for its electric vehicle lineup, despite a recent decline in EV sales. This decision is part of CEO Elon Musk’s broader initiative to optimize the Tesla sales and delivery system.
“It has become complex and inefficient,” Musk wrote in a post on X, the social media company he owns, in response to another user’s comment.
Musk’s announcement on X coincides with the unfortunate news of thousands of Tesla employees losing their jobs. According to a source, the layoffs will impact a significant portion of the workforce, approximately 14,000 individuals, due to the company’s underwhelming financial performance.
In an interview with Eltrys, a recently laid-off Tesla delivery worker revealed that their location was understaffed and that they regrettably had to let go of several employees. It seems that Tesla has removed the majority of job listings from its North America careers page, leaving only a few postings related to its Manufacturing Development Program. This could indicate a hiring freeze.
Rohan Patel, who was previously the VP of Public Policy and Business Development at Tesla, stated to Eltrys that he departed from the company on Monday due to significant changes occurring within the organization. Patel and Drew Baglino, formerly Tesla’s SVP of Powertrain and Energy, both departed from Tesla this week, making headlines as high-profile executives.
Ending discounts across its lineup in the United States, including the Model 3, Model Y, Model S, and Model X, comes as a surprise for Tesla. Throughout 2022, the company raised prices. The following year, Tesla began consistently lowering prices on its vehicles, with certain models experiencing a significant drop of nearly 20%. This practice has been ongoing throughout this year, too. In April, Tesla reduced the prices of several long-range and performance Model Ys by $5,000, while rear-wheel-drive versions saw a decrease of over $7,000.
In addition to last week’s announcement, Tesla has decided to reduce the monthly subscription cost of its supervised full self-driving software. Tesla has set the new price at $99 per month, a reduction from the previous $199 per month.
Although the price-cutting of 2023 led to a significant increase in Tesla’s vehicle sales, the company’s profit margins have decreased. In the first quarter of 2024, Tesla experienced a decline in its delivery numbers compared to the previous year. In seven of the last eight quarters, the automaker has consistently produced more cars than it has shipped. This trend suggests that Tesla may prioritize this area in the coming year.
In January, Tesla cautioned that sales growth in 2024 may be significantly lower than in previous years due to the upcoming launch of a new vehicle platform. However, it seems that the company has decided to prioritize the launch of a robotaxi by August, potentially leading to the cancellation of the $25,000 EV.
It’s unclear how the removal of discounts on Tesla vehicles aligns with the automaker’s new strategy to streamline sales and delivery. Unfortunately, Tesla was unavailable for comment.
Tesla’s direct-sales model has garnered significant recognition for its ability to bypass the conventional dealer setup, a feat that required years of legal battles. However, after the initial purchase, Tesla has consistently made adjustments to its sales and delivery strategy.
In late 2018, Musk announced that Tesla had acquired several trucking companies to facilitate the transportation of a growing fleet of Model 3 sedans. In early 2019, Musk made a sudden announcement about Tesla’s plans to close several retail stores and lay off workers. The goal was to achieve the necessary savings to ensure the financial sustainability of Model 3. In less than two months, the company made a complete turnaround. Recently, Tesla revealed in late 2022 that their usual end-of-quarter rush to produce and deliver as many cars as they could was becoming more challenging. Despite previous promises to address the issue, Tesla continues to grapple with these quarterly bottlenecks over a year later.
