Tesla to close most stores as it launches Model 3

Source: David Iaconangelo, E&E News reporter • Posted: Monday, March 4, 2019

Tesla Inc. announced a price reduction yesterday for its Model 3, setting a $35,000 benchmark for the car billed as the company’s first mass-market model.

And in an about-face, the automaker also said it would close most of its brick-and-mortar sales locations in coming months, preserving a few as showcases and information centers in high-traffic areas. The company had been pushing hard to expand storefronts for selling solar roofs and batteries.

Sales of its cars will shift entirely online, a step that Tesla said would help it cut the price of all of its vehicles by an average of 6 percent.

The move might also spur further job losses, following Tesla’s layoffs of some 3,000 employees in January.

Tesla founder and CEO Elon Musk had teased the announcement earlier this week, with enigmatic tweets promising “[s]ome Tesla news” yesterday afternoon.

It comes nearly three years after the Model 3’s launch, where Musk boasted of the car’s capabilities and promised, “You will not be able to buy a better car at $35,000.”

Cost-cutting measures were stressed by Musk and other executives in a January earnings call, where they said the company had slashed the number of labor hours required in Model 3 production by 65 percent in the latter half of 2018 (Energywire, Jan. 31).

Yesterday, Musk also revised a prediction that the company would turn a modest profit in the first quarter, saying on a conference call that he did not expect it to be profitable until the second quarter, according to CNBC.

New legal troubles emerged this week for Musk, when the Securities and Exchange Commission (SEC) asked a judge to hold the Tesla CEO in contempt of a settlement requiring him to obtain board approval for Twitter posts with material relevant to Tesla investors. Musk had written that the company would produce 500,000 cars in 2019, a claim the SEC called “inaccurate” (Energywire, Feb. 26).