Published: Tue, March 05, 2019
Finance | By Loren Pratt

Tesla's mass market ambitions require 'more stores not less'

Tesla's mass market ambitions require 'more stores not less'

Tesla Inc. said it would begin shutting stores and move to selling vehicles only over the internet, an extraordinary step aimed at cutting costs so the company can sell its Model 3 compact at a long-delayed starting price of $35,000, Dow Jones Newswires reported in an article made available to EFE on Friday.

"In many parts of the United States, we are unable to sell effectively because of franchise laws", he said.

The arrival of the $35,000 Model 3 had been largely anticipated - although it came months earlier than expected - but news that Tesla planned to dismantle its network of stores, a hallmark of its upscale sales strategy, caught many off-guard. A lower-priced Model 3 is seen as critical to Tesla's long-term viability as it needs to reach more customers who can afford the vehicles to offset slowing sales of costlier sedans.

Tesla said the $35,000 version of the Model 3 has a 220-mile range and can go from zero to 60 in 5.6 seconds. Tesla also said Thursday it now expects to record a loss in the first quarter.

Metzler's Pieper thinks the announcements are "just the beginning of more savings" from the Palo Alto, California-based company.

It's getting a little cheaper to own a luxury model Tesla.

The company's shares were halted, and Tesla suspended all orders on its website ahead of Thursday's news.

Shares of Tesla fell 3.4 percent after hours.

'Although lower in cost, it is built to achieve the same flawless 5-star safety rating as the longer-ranged version, which has the lowest probability of injury of any auto ever tested by the U.S. Government, ' the firm said in the announcement Thursday evening. In January it had said it was "optimistic" about being profitable in every quarter of 2019.

Mr Musk reiterated that improving service in 2019 is Tesla's top priority and said the company will be adding jobs worldwide to address what's become one of the biggest concerns of new customers.

To compensate for the removal of its dealer network, Tesla will offer week-long or 1000mi (1600) test drives: "You can now return a auto within 7 days or 1,000 miles for a full refund".

Adding to the pressure Tesla faces is the growing level of competition from Chinese electric carmakers as well as established players like Volkswagen's Audi and Porsche brands, and Jaguar Land Rover.

Several traditional auto dealership chains have taken steps in recent years to pare back property holdings as vehicle buyers increasingly use smartphones and internet tools to shop for cars instead of visiting the dealership lot.

This is a watershed moment for Tesla, which has only offered the more expensive Long Range Model 3 since its launch.

Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free.

Over the next few months, Tesla would be winding down many of its stores, with a small number of stores in high-traffic locations remaining as galleries, showcases and Tesla information centres.

However, you'll now be able to return your new Tesla within seven days (or 1000 miles, whichever comes first) for a full refund if you're not happy with it.

"People like to go to vehicle showrooms and kick the wheels and sit in the auto", he added. But Mr Musk's goal for Tesla has always been to produce a mainstream electric vehicle for the masses.

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