With e-commerce dominant, even one of the sexiest retail proprietors around is having trouble making the business model work.
Tesla chief executive officer Elon Musk announced in a call with reporters yesterday that the company would close stores and move all car sales online in an effort to cut costs, the Los Angeles Times reported. The comments came alongside an announcement that Tesla would begin selling a new version of its Model 3 sedan for $35,000, a long-promised price-point that Tesla-watchers see as a measure of the company’s ability to sell to the mass market.
Some Tesla stores will be kept on as display showrooms, Musk said, without specifying how many stores would be permanently shuttered. Tesla’s website lists 130 current retail locations, with the greatest numbers in California, Florida, Texas, Illinois and New York.
Founded in 2003, the company, which makes sporty electric cars and SUVs, broke the mold of automakers from the start by selling vehicles only direct to consumers. All other new-car sellers in the U.S. rely on independent dealerships to reach customers. Thanks in part to vociferous lobbying by dealers’ associations, most states ban or severely restrict manufacturers’ selling cars directly.