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Elon Musk Is Mad at Tesla Salespeople for Acting Like Salespeople

Friday, September 30, 2016.

It seems like part of the American way of life. You walk into a car dealership. You find a car you like. You try to talk the price down. The salesperson tries to sell you on extra features you don't need. Eventually, you haggle your way to a price and buy a car.

Except at Tesla. The electric car maker takes its own approach to just about everything, including selling its cars, which it does only at its own stores. And per CEO Elon Musk's direct orders there is absolutely, positively no haggling.

But getting a rule like that to stick turns out to be something of a challenge, especially when it conflicts with some of the company's other priorities, such as turning a profit. Tesla has only done that for one quarter in its ten-year history--but promised investors it would manage to do it this year. With analysts noting that Tesla loses money on every car it sells, some have questioned whether the company can ever turn a profit--CNBC actually called it a "hot mess."

So Musk reportedly put out word that achieving profits in the third quarter was critically important and that meant delivering every car it possibly could. Not only that, the car maker unveiled its new Model S P100D in March, and some stores were left with a few too many of the previous model in inventory. And so, the no-haggling, no-discount policy began to crumble.

One auto industry analyst published a report that noted: "We detected aggressive Model S discounting at U.S. sales centers intended to maximize Q3 deliveries. We found Tesla has been employing a deeper discounting formula to drive sales of inventory models, with all offers expiring this Friday, the last day of the quarter." Consumers were encouraged to note in the comment sections of stories about the Tesla discounting what deals they'd been able to get. Many did, reporting some pretty nice buys. And one Tesla buyer posted on Reddit that he'd been told a deal would expire if he didn't buy the car by Friday, even though the company didn't have one ready for him and would have to give him a loaner.

That's where Musk jumped into the fray. He apologized to the Reddit poster and tweeted an image of a letter he'd sent to all employees, instructing them that they must stop providing discounts on brand new cars. (Discounts on floor models, damaged cars, etc., were still permissible.)

"I always pay full price when I buy a car," the letter read, "and the same applies to my family, friends and celebrities, no matter how famous or influential. The acid test is that if you can't explain to a customer who paid full price why another customer didn't without being embarrassed, then it is not right." While he was at it, he also decreed that a car could not be considered sold until the customer drove away in it. Having someone pay for a car in advance would no longer be allowed to skew the quarterly numbers.

In our society, both negotiating car prices and offering discounts on earlier models when new models arrive are the norm. So getting car salespeople to stop doing what they've done almost since the days of the Model T sounds pretty ambitious.

Then again, this is the guy making plans to colonize Mars. So chances are, he can pull it off.