Tesla CEO Sends Memo to Employees Explaining Store Closures

01:57 03/16/2019

Electric vehicle maker Tesla's TSLA  CEO, Elon Musk, has sent a memo to employees that explains why the company will not be closing all of its stores as once previously said.

The memo was sent out via an e-mail and explained that Tesla will be increasing its prices by about 3 percent on most of its vehicles after March 18, and will keep more stores open than it had recently planned.

Musk also noted that stores would re-open with fewer employees running them, but others that were in hard-to-find locations, would remain shut

The full memo reads as follows:

We are making an adjustment to our plans and will, at least for the next several months, retain more stores than previously announced. For the most part, the roughly 10% of Tesla sales locations we closed recently don’t pass the Sherlock Holmes test. Meaning, most of these stores are in such difficult or obscure locations, only Sherlock Holmes could find them! Even if selling through stores were our only means of sales, we would still have closed them down. A few stores in high visibility locations that were closed due to low apparent demand generation will be reopened, but with a smaller Tesla crew.

There are another 20% of locations that are under review. Depending on their effectiveness over the next few months, some will be closed and some will remain open.

As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% or so on average worldwide. All things considered, this seems like a reasonable compromise between current and future customers. We will only close about half as many stores, but the cost savings are therefore only about half.

Potential Tesla owners will have a week to place their orders before prices rise, so current prices are valid until March 18th. Note, there will be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and X.

To be clear, all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes. And the generous return policy of 1000 miles or 7 days, whichever comes first, should alleviate the need for most test drives at stores at the potential Tesla owner’s request. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.




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