Tesla Is Closing Stores Starting Today, Cuts Pay And Fires More Employees

Tesla Inc. is slashing the pay of its retail employees and firing more staff even as it began shutting down its first retail showrooms Monday as part of a painful restructuring to make the standard Tesla Model 3 capable of being sold for only $35,000.

The triple whammy that kicked the guts of Tesla marketing and sales personnel was delivered last week by Tesla CEO Elon Musk. In an email memo to staff, Musk said Tesla has launched a review of its sales and marketing effort and will start closing almost all of its retail showrooms in the coming weeks.

Insiders have told various media outfits that Tesla has 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 and in other states on the mainland. Tesla refuses to reveal which stores are being closed.

The company also told a large number of employees not to show up for work on Monday. These people, however, were told they’d remain on the payroll until further notice.

On the other hand, employees who weren’t fired were told that it’s business as usual. There is no guarantee they won’t be fired in the future, however.

A number of employees have told media outlets Tesla is trying to force them out of their jobs by cutting their pay during the transition period. Tesla has refused to comment on this serious charge.

This latest blow to employee morale at Tesla is the part of the company’s effort to keep its promise to sell the standard Model 3 at $35,000 per car. Last week, Tesla said it will fire employees and close stores since orders for the standard Model 3 will all be made online and on mobile devices.

Because sales of the standard Model 3 will all be online, Tesla CEO Elon Musk said the company will close a number of stores and lay-off more employees. He said these moves are aimed at saving money and lowering the price of the Model 3 to its base level of $35,000.

“There’s just no way around that,” said Musk. “I wish there was some other way.”

“It is excruciatingly difficult to make this car for $35,000 and still be financially sustainable,” he said. He noted it will take another two to three years before Tesla can produce a cheaper electric car.

Tesla has fired thousands of employees over the past years. In June 2018, Tesla fired more than nine percent of its workforce, or some 3,400 employees.

In January, Tesla said it will fire more than 1,000 employees at its various showrooms and offices in California to keep producing its Model 3 all-electric sedan.

Tesla will also close many of its stores but will leave some open as galleries or information centers. Southern California is home to some 15 Tesla stores.