According to details from a recent report by Electrek, Tesla is canceling employee bonuses that were previously associated with quarterly delivery quotes. Reportedly, the US electric automaker will also raise starting salaries for salespeople, which may help make up for the loss of bonus compensation.
That said, the publication suggests that regardless of the pay raises, many Tesla employees may see reduced overall wages due to the elimination of performance-based bonuses. This is yet another example of how Tesla's direct sales model, and more specifically, its ownership and operation of its "dealerships," puts it in control of how to handle compensation for employees in sales and delivery departments across the globe.
Tesla's direct sales model has seen strong contention over the years, and the EV maker still can't legally sell its cars in some US states. However, as legacy automakers push forward with electric cars, some are learning that the traditional dealership model may not work in their favor. While some dealers have shied away from selling EVs altogether, others have taken advantage of the growing demand by marking up popular electric vehicles way above MSRP, and there's not a whole lot automakers can do about it.
At any rate, Electrek notes that Tesla has been compensating salespeople via bonuses for years. However, as you may remember, CEO Elon Musk announced in 2019 that Tesla was going to close most stores and move to an even more online-based sales model. In fact, the company did begin moving in that direction, though it didn't take long before it changed course. In the midst of the transition that never really happened, Tesla did close some stores and reduce some wages.
After Tesla decided not to continue closing its "dealerships," it continued to offer sales and delivery bonuses of 25% based on meeting specific store and/or regional quotes. Electrek says the workers could take the bonus in cash or as stock options. However, more recently, anonymous sources tipped off Electrek that the bonuses are being eliminated. At the same time, the sources said base salaries will increase by 12.5 percent.
It seems the bonuses may have helped Tesla have a string of successful quarters, though demand is so high now that there probably doesn't need to be a reward to encourage each successful quarter. Moreover, while Electrek writes that most employees were reportedly successful with getting the bonuses in the past, there were almost certainly some who were not. Perhaps the across-the-board salary raise will create a more even playing field for Tesla's salespeople in areas where EV adoption is not as healthy as it is in states like California.
It's also important to note that toward the end of last year, Musk suggested that perhaps it was time to relax a bit (see article above). He was basically saying there really is no need for Tesla and its employees to jump through a series of hoops to get a certain number of cars delivered by the end of the quarter.
With the growing demand and Tesla cranking out cars, a vehicle that doesn't get delivered by December 31 is certainly going to be delivered shortly thereafter, so it shouldn't be such a whirlwind that creates more employee stress. In addition, Tesla just opened two huge new factories, it's expanding in China, and it seems it may also expand at Fremont. There is likely a certain point at which there are so many cars produced and ready to be delivered that a bonus would become moot.
