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Tesla Chief Executive Elon Musk sent a letter to employees Wednesday to offer more clarity around the company’s decision to close stores.
The email obtained by CNBC lays out a plan that seems prudent for the company – keep high-traffic, high-sales stores open. Close stores that don’t produce.
“Stores with a high visitation rate and that lead to significant sales will absolutely not be closed down,” Musk said in the email. “It would not make any sense to do so, except in rare cases where the rent is absurdly high. Moreover, Tesla will continue to open stores throughout the world that meet the above criteria.”
Musk said the same principles will be applied to the sales team. “No one who is a major contributor to demand generation will be let go,” the letter said.
The company announced last month a plan to close stores and move all sales online in an effort to lower prices. Days later, that plan changed to leaving some stores open, which resulted in raising prices from the previously announced discount.
The company has not yet announced which stores will be closed.
The full letter is below:
From: Elon Musk
March 27, 2019
Subject: Tesla Stores & Sales
There [is] still some uncertainty around Tesla stores and the sales team. Hopefully, this note clears things up. Please let me know if there is anything I’ve forgotten to address.
– Stores with a high visitation rate and that lead to significant sales will absolutely not be closed down. It would not make any sense to do so, except in rare cases where the rent is absurdly high. Moreover, Tesla will continue to open stores throughout the world that meet the above criteria.
– Stores that are in a location with low visitation rates (ie empty most of their opening hours) and lead to low sales will gradually be closed down. This is analogous to seeds on barren ground. There is no reasonable way to justify keeping such stores open.
– Stores that are somewhere in the middle will be evaluated over time to see [if] there is some way to allow them to cover their costs. If there is, they will remain open, otherwise not. However, these stores will be given a fair opportunity to prove their case.
The above principles also apply to the sales team. No one who is a major contributor to demand generation will be let go. That would make no sense. However, sometimes, in a company with 45,000 people, things happen that make no sense. I will do my best to remedy issues when brought to my attention directly or through [email protected]
What is meant by “all sales will be online” is just that the act of purchasing a Tesla will always be done via the potential new owner’s phone or computer. This is true whether they are at home or in a store. Unlike buying from other carmakers, ordering a Tesla doesn’t require any *physical paperwork*.
This is very different from normal expectations for buying from other carmakers and is simply meant to emphasize that ordering a Tesla is super easy and can be done in 2 minutes from your phone or laptop at Tesla.com. Ordering a Tesla is not much harder than ordering an Uber, but hardly anyone knows this!
However, many potential Tesla owners will still want to talk to a Tesla representative in person or want a test drive from a Tesla representative. Stores also have a small number of Tesla vehicles available to drive away immediately for customers that want a car right then and there.
This is why stores and Tesla product specialists and owner advisors will always be of critical importance to our long-term success.