Do Tesla Dealers and Sales Staff Make Commission?

When we think of the world of car sales, we often have mixed feelings about it. The more sympathetic among us see hardworking staff striving to make sales, meet quotas and earn key commissions to support themselves and their families. Those somewhat less generous may see more grasping and ruthless individuals who will do anything to upsell you and force more money from your bank balance into the dealership coffers, a percentage of which they will also gain.

However you might look at them, and whatever experience you’ve had personally with car sales staff, there’s no denying that it’s a pretty tough job. It’s not just the general pressure of the sales world, but also the fact that you have so much competition in the modern marketplace, and also the ever-increasing shadow of online purchasing looming overhead. Like the sword of Damocles, it threatens one day to fall and put the final wound into an already struggling profession.

So how does Tesla approach this tricky problem? Well the gist is…

Tesla’s dealerships and approach to sales staff has changed dramatically over the years, from a traditional model in 2018 to a central (more online) based approach in 2019.

Car Sales Staff at Tesla – How Does it All Work?

If you’re an aspiring Tesla buyer, you may have made your purchase through the clean-look and stylish web platform. There’s still a very good chance you dealt with a member of their sales team on some level, however. According to glassdoor.com, the typical annual salary for a Tesla Sales Associate is $44,806. But, has it always been the same?

For further reference, salespeople at Tesla are known as Tesla Advisors, so we shall refer to them as such from here onward.

Pre-2019

Back in 2018, according to a piece published on electrek.co, a Tesla spokesperson had claimed in a strongly worded statement that an advisor was able to make as much as $150,000 annually from a base of just $30,000-40,000. That’s an incredible leap, made possible by commissions and other incentives that were in place at the time.

What’s more, it was also the case (and remains so) that Tesla advisors get stock as part of their remuneration, the holdings of which can increase over time based on performance review each year.

All this was to change by 2019, and especially by the second half of 2019, which we will get into more detail about in the paragraphs below.

Switching to Hourly Pay

White Tesla Model 3 Dual Motor Long Range UK car
White Tesla Model 3 Dual Motor Long Range UK car

At some point in 2018-2019, Tesla made a switch in its pay scale to base it on hourly rate of between $17 and $31 an hour depending on experience and record. As they did this, they also maintained commissions into the first half of 2019, but limits started to be imposed on which models those bonuses applied to.

For example, the new Tesla Model 3 that arrived in 2019 was being sold by the Tesla advisors, some believing that the $200-per-unit bonus applied to all models. You can imagine their displeasure at learning that, in fact, the $200 was only for the long-range model, not the standard-range car.

Why was this? Why not offer the bonus on the standard- and mid-range models? In fairness, technically the bonus did apply to all models, but it seems that this was mostly just on paper. What the new rule stated was that advisors would receive the $200 bonus for selling models that were currently in-stock. Anything that was out-of-stock didn’t count. Since the company maintains almost no or very limited levels of inventory in the standard- and mid-range cars, the $200 really effectively applies just to the long-range model sales.

Choppy Waters: Consolidation of Sales Teams

PARIS, FRANCE - NOVEMBER 29: Tesla Model S showroom and two luxury tesla cars outside and one inside. Tesla is an American company that designs, manufactures,
Tesla Motors dealership exterior facadeand sells electric cars

Another big change that happened to the sales experience is that car and energy sales teams were merged together into single brick-and-mortar locations. The teams now worked together to sell both cars and home solar systems. Under the new system, the teams had to work together to meet goals, otherwise no one would receive any form of bonus, regardless of how well an individual did by themselves.

Morale seemed to bottom out, as all the changes made to pay, work environment, bonuses, commissions all seemed to be shaken up (or out of existence) in a relatively short space of time.

Tesla has not been a stranger to tensions with its sales staff. Back in 2018, it settled a million-dollar class-action lawsuit with a portion of its sales staff. The three advisors who led the suit claimed that Tesla failed to pay sales staff a minimum wage and overtime. The also said that there was no meal or proper rest breaks provided as mandated by California law. Tesla settled the case, giving each of the 253 members in the class around $2,200 each on average.

The difficulties with staff continued into 2019 as Tesla decided once again to make further cuts to commission and bonuses, while also increasing the base but also significantly boosting the amount of responsibility undertaken by each advisor in the second half of 2019. For example, it became the expectation that an advisor would be able to complete a vehicle delivery within 15 minutes. That may sound like an easy proposition on the surface — “Here’s your Tesla, enjoy! Oh, thank you!” — but in fact there’s quite a lot to pack into that quarter of an hour.

Within 15 minutes, then, a Tesla advisor has to correctly complete all customer paperwork. As they are ensuring that gets done, they then have to check that customers are happy with their delivery, and even teach them on how to use specific features within the car. This includes things like using the on-board touchscreen system, dashboard controls and the Autopilot. That’s a pretty tough proposition, even if your buyer has had a Tesla before and is just getting a refresher. Given that the majority of buyers will be first-timers, it means an extremely high-pressure environment.

Petition for Change

One disgruntled Tesla advisor from Virginia, with the very appropriate first name Dare, send out an email encouraging his teammates to get on board with a petition that would increase their base pay by 15 percent and bring them, as Dare Brewer put it, “closer to a living wage.” Brewer described recent changes as bringing “a very slight increase in base pay and a devastating decrease in commission.”

This is news past, but it does give us a window into the current climate of sales. Dare Brewer’s petition has currently garnered around 187 signatures by January 2020, and currently has an impressive 3,161 signatures of a target of 4,000.

So, Do Tesla employees still make commission?

From the latest information we have, it seems that there are still commission and bonus incentives in place for Tesla workers. The reality, however, seems to also be that Tesla have moved away from the commission model towards a base pay with benefits type of system. This may seem, on the surface at least, a rather cruel series of reforms that is working to the detriment of many loyal Tesla employees.

When we take a more nuanced look at Tesla’s structures and operations, however, we find quite logical explanations for such changes.

The Low-Pressure Approach: Tesla’s Hallmark

Tesla Model S vehicle dash.

While some employees over the last few years may have voiced their dissatisfaction with the changes brought to their workplace, customers have consistently reported how much they enjoy the experience of buying a Tesla car. One of the key reasons for that is the low-pressure sales approach used by the company. Tesla advisors are trained to be just that, ADVISORS, first and foremost.

As the name suggests, the work primarily involves helping customers find exactly what they need, and introducing them to the innovative technology and unique style of Tesla products. At no point do Tesla advisors actually apply pressure to customers to make sales. This kind of environment was always part of the Tesla ethos; to get people interested and even in-love with the Tesla product and technology and let the sales come naturally after that.

Under such a system, it follows that not incentivizing salespeople through commission is a pretty good idea and absolutely in-line with that company ethos. Where many other car salespeople make the bulk of their income on commission, Tesla employees have a larger base salary to work from, and the added bonus of stock options if they perform well. To incentivize people through commission would be to betray the philosophy that is guiding the development of the Tesla sales operation.

Conclusion: Balancing the Factors

It seems quite possible to do well while working as a Tesla advisor. If you and your team meet your goals, the bonus could be the very valuable and lucrative asset of Tesla stock. Your base pay would also increase to levels that would ensure a greater level of security when compared to sales staff who follow the more traditional commission-based model.

One thing that is quite unique about even the disgruntled Tesla employees past and present is that they all claim to love the company and its mission. This is quite different from other malcontents who tend to start shooting off their mouth about how bad a company is when this kind of dispute emerges.

In the end, perhaps we should reflect on the fact that Tesla’s success brings us all a neat commission of a cleaner environment, more stylish (and increasingly affordable) cars on the road, and a viable future for innovative electric car design and engineering.

About Tristan Perry

Tristan is a software developer who is passionate about eco-friendly lifestyles - and products, such as green cars! He has loved seeing Nissan and Tesla sell loads of quality EVs over the last decade - with every other car manufacturer finally following suit.

EV adoption seems to be at a tipping point now, with 'ordinary folk' starting to order them too. This is naturally aided by very expensive gas prices, but also a genuine desire for people to try and improve the environment.

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