Why This Startup Is Buying Tesla Cars for Its Employees
A small company in Raleigh, N.C. is taking a new tack to attract top talent.
Practichem, a company that makes scientific instruments, will lease a Tesla Model 3 for each of its employees, including those it plans to hire in the coming year, the company’s CEO Nick DeMarco confirmed to North Carolina news outlet News Observer. The company will lease Model 3s for its existing full-time staff team of 15 employees, as well as the 10 people it’s looking to hire.
Startups have long used incentives to attract employees. In Silicon Valley, for instance, one of the best ways to get top talent and keep those employees is to offer stock options. By offering stock, startups are able to conserve cash by paying employees less but still attract top-level professionals who want a stake in the company.
While Practichem has decided to go to with a Tesla (TSLA) to attract employees, its move is not unlike how Silicon Valley operates. Stock options typically vest over a period of time, making it less likely for employees to leave. At Practichem, the company is offering the Model 3, which likely won’t get to those who preordered the car until 2017, at the earliest. Depending on where Practichem’s leases fall in line, it’s possible that the company’s employees will be waiting more than a year before they actually hit the road with their Teslas.
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For its part, Tesla was taken aback at the interest in its Model 3. The car, which comes with a starting price of $35,000, is far more affordable than the luxury Model S and Model X models it currently sells, making it immediately popular among those who want to break away from traditional gas vehicles. Since then, some analysts have wondered how Tesla will satisfy heavy demand for its vehicles. However, Tesla CEO Elon Musk has said that his company will have no issue fulfilling Model 3 demand.
To bolster his argument, Tesla raised $1.5 billion in a new common stock offering to finance expansions related to Model 3 production. The company hopes that with its new cash, it’ll be able to produce 500,000 electric vehicles per year by 2018.
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So, why did DeMarco choose the Model 3 for his employees? He told the News Observer that his team has been working hard and should be “rewarded” for its effort. He also acknowledged that it could help him attract talent at lower cost, saying that it’s likely “much cheaper” than employing “headhunters” to find the right people.