Tesla Changed Course on Its Ambitious Sales Shift, and Owners Aren't Happy
Tesla has partially reversed its decision to close almost all of its stores and only sell cars online, an announcement that received criticism from fans over fears it would spell the end of test drives. The company announced on Sunday that, having evaluated its current retail locations over the past two weeks, it had decided to keep “significantly more stores open than previously announced.”
Under Tesla’s new plan, the company will only close about half as many stores as previously envisioned. The remaining stores will offer Teslas for test drives and stock a small number of cars, but sales will still be completed online. The company has reasoned that, as it is only closing half as many stores, it will only save around half the costs, which will mean a three percent price rise following the six percent cut two weeks prior.
The reversal, and Tesla’s handling of communications, has led to further criticism from the community. Reddit user “M3FanOZ” described it as “really disorganized and unprofessional,” while a Reddit user called “VasiS” called it “not how any reputable company should be run.”
“This whole episode has shaken my view of the company more than anything else in recent memory,” wrote a Reddit user called “MasterK999.”
On February 28, Tesla originally announced a bold strategy to cut costs in order to sell cheaper cars. The company announced it would start taking orders for the $35,000 Model 3, a price point promised to reservation holders three years ago. At the same time, it announced global sales would go online-only, and it would close many of its stores while maintaining a select few in high-traffic areas as information centers. These cutbacks would enable Tesla to reduce all vehicle prices by six percent and achieve its promised cheapest-ever price point.
The initial announcement led to outcry from fans. Tesla has built up a community of advocates, keen to espouse the benefits of electric vehicles in a world dominated by gas-powered machines. A key method of convincing skeptics was to ask them to take a test drive and feel the car for themselves, with zero commitment. Tesla originally announced that, under its new model, users could instead buy a car and return it before seven days or 1,000 miles. The announcement was described by one user as “honestly kind of scary.”
Tesla explained in its new announcement that, although prices are rising again, current prices will be valid until March 18. There will also be no price rises for the $35,000 Model 3, instead hitting more expensive versions as well as the Model S and X.
For the stores, the company will continue to evaluate locations over the next several months. Tesla will re-open some of the 10 percent of stores that were recent closed due to low foot traffic, but these stores will have a smaller staff. A further 20 percent of stores are in review, and Tesla’s decision to close will be based on their performance over the next few months.
Tesla’s cheaper cars are part of the company’s second master plan, unveiled in 2016, which will see the company transition from a premium automaker to a more mass-market firm. Part of this plan involves the $35,000 Model 3. Tesla is expected to unveil the Model Y, a compact SUV that forms the second part of this plan, later this week. A Tesla Pickup Truck, the third piece of the puzzle, is due to launch sometime this year.
The company is building a new factory in China to produce these affordable cars closer to the buyer, with CEO Elon Musk calling for more factories to make affordable cars. With the struggle Tesla faced to reach its current Model 3 production rate, it could face new challenges in this upcoming expansion.