Tesla Motors, Inc.’s (TSLA - Analyst Report) CEO Elon Musk announced that the company would continue to stick to its no-discount policy and employees should follow the same. Musk’s letter to Tesla’s staff via social-media platform, Twitter (TWTR - Analyst Report) , came amid reports that employees of the company were offering discounts to customers to meet the quarter-end delivery targets.
Per Musk’s tweet, there were very few cases of such discounted sales worldwide and action to rectify the situation has been taken. While offering discounts is a common occurrence among automakers, it usually implies overproduction and impacts consumer perception. Tesla follows a strict no-discount policy even for friends and family. The company aims to remove the pressure on customers of bargaining with car sales persons by imposing a uniform selling price.
The discount offer from employees supposedly came after Musk urged staff to cut costs and increase deliveries in the third quarter of 2016 via email on Aug 29. Musk intended to generate funding from investors on a solid quarterly performance. The company requires cash to begin the production of a new car model, Model 3, and complete the Gigafactory as well as its intended merger with SolarCity (SCTY - Snapshot Report) , which is also facing liquidity concerns.
However, per the mail released on Twitter, the third quarter’s results would only include sales where delivery of the car was completed in the period rather than only title transfer.
Shares of Tesla closed 0.22% higher at $206.27 on Sep 28.
Tesla currently carries a Zacks Rank #3 (Hold).
A better-ranked auto stock is Superior Industries International, Inc. (SUP - Analyst Report) .The company has witnessed positive estimate revisions in the last 60 days and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>