Tesla Is Closing Stores Again, Elon Musks Emails Staff About Plan

Tesla Inc., CEO Elon Musk is trying to sort out the chaos and demoralization among staff he caused with two conflicting announcement he made over the three weeks about firing sales staff, closing showrooms and limiting orders for Tesla vehicles to the internet.

In another memo to Tesla staff on Wednesday, Musk explained the rules that will govern firing employees and closing stores. And the plan that future orders for Tesla electric vehicles all be made online stands.

Musk triggered a hornet’s nest worth of pain with a memo at the start of the month announcing Tesla will start closing almost all of its retail showrooms in the coming weeks, and fire employees after a review of its sales and marketing effort.

Tesla informed employees at over two dozen showrooms they should call their clients to reschedule test drives and appointments to other stores because their showrooms are being closed down. Most of these stores are in California but Tesla refused to reveal which stores are being closed.

The company also told a large number of employees not to show up for work on March 4. These people were also told they’d remain on the payroll until further notice. Employees who weren’t fired were told that it’s business as usual.

Then, Musk changed his mind on March 11 saying he’d leave most company stores open but will raise the prices on his cars to generate more revenue to keep more staff on board.

His second email issued Wednesday (March 27) under the headline “Stores & sales” lays out clear ground rules about the two major issues at stake: employee firings and store closings.

Musk said stores with a high visitation rate and that lead to significant sales “will absolutely not be closed down.” He also said Tesla will continue to open stores throughout the world that meet its criteria.

On the other hand, stores in locations with low visitation rates (i.e. empty most of their hours) and that lead to low sales “will gradually be closed down.”

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.”

As for the sales team, Musk said “no one who is a major contributor to demand generation will be let go. That would make no sense.”

He explained that what he 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. He said that unlike buying from other carmakers, ordering a Tesla doesn't require any "physical paperwork."

He noted that ordering a Tesla “is super easy and can be done in 2 minutes from your phone or laptop at Tesla.com.”