Tesla made a drastic change to its bonus structure before it decided to cut costs by closing stores, salespeople say

Tesla made a drastic change to its bonus structure before it decided to cut costs by closing stores, salespeople say

tesla store germany

Hannibal Hanschke / Reuters

  • Tesla dramatically altered its bonus structure for retail employees last year, current advisers tell Business Insider
  • At the same time, the company merged all sales roles to encompass both car and energy products.
  • The changes came as Tesla raced to deliver vehicles ahead of a quarterly deadline.
  • Last week, CEO Elon Musk announced the company shuttering most of its retail stores and shifting all sales to the internet.

Ahead of Elon Musk's surprise announcement that Tesla would close most of its 378 retail stores, the company shifted the roles of its salespeople and changed bonus structures in a way that current employees say was a bid to cut costs.

In the third quarter of 2018 - the first quarter of two consecutive profits reported by the company - energy advisers that formerly worked in the field were moved to in-store positions, alongside owner advisers who focused on selling vehicles, a current Tesla energy advisor told Business Insider.

Shortly after, Tesla erased any distinction between the two sales roles. All advisers were instructed to sell the whole ecosystem, both vehicles and energy systems to customers in stores.

"We had to adjust to not being fed all of our home appointment leads, but how to drive leads at the store level," the employee said. "That was very difficult for the company to do. It didn't seem like they had very much direction or a cohesive strategy on how to do that."


Around the same time, Tesla also changed its bonus structure so that individual bonuses were tied to team performance in a store. Previously, bonuses and commissions were on an individual sales basis only.

"If the store didn't hit its minimal goal, let's say 70% of goal, you would get nothing," the advisor said. Another source with knowledge of the bonus structure changes also confirmed this to Business Insider.

A Tesla spokesperson declined to comment.

CNBC reported Thursday that the company was sending hourly employees home early and asking workers to take time off in a similar bid to cut costs.

News of the bonus changes come as Tesla introduces a $35,000 version of its Model 3, and moves all sales to online. This month, the company plans to unveil a new car, the Model Y.


Get the latest Tesla stock price here.