Tesla is closing stores, shifting all sales online

Key Points
  • Tesla CEO Elon Musk said Thursday the company will be reducing headcount in sales, and closing most of its stores.
  • Instead, Tesla will sell its cars online only, and give drivers up to a week to return newly purchased electric vehicles if they aren't satisfied.
  • The moves allow Tesla to cut some costs, and relax its lobbying efforts in states that don't permit auto makers to operate their own dealerships.
Tesla Chief Executive Elon Musk stands on the podium as he attends a forum on startups in Hong Kong, China.
Bobby Yip | Reuters

Tesla is shifting its sales to online only, and giving drivers up to a week to return their newly purchased vehicles if they aren't satisfied, the company announced on Thursday.

The move to e-commerce only will require Tesla to reduce headcount in sales, CEO Elon Musk confirmed. It should also help Tesla cut some operating expenses, and avoid dealing with local politics that have prevented it from operating its own stores (dealerships) in certain states including Connecticut, New Mexico and others.

"We will be closing some stores, some reduction in headcount as a result -- there's no question about that. I wish there was some other way. Unfortunately, it will entail a reduction in force on the retail side. There's no way around it," Musk said.

In a blog post Tesla emphasized that shifting sales to online only would enable it to sell its Model 3 vehicles for the long-awaited base model price of $35,000.

Tesla also said, in that post, it would be shifting resources to improve its customer service systems, with the goal of providing same-day service to Tesla owners.

Tesla's service team reports directly to Musk at this point. The company intends to do as much as possible through its mobile service, rather than asking drivers to come to Tesla service centers, it said.

On Thursday's press call, following the announcement, the CEO did not disclose how many stores would be shuttered, what any restructuring costs might be, or whether savings would offset the cost of hiring more service employees including auto technicians.

As the electric vehicle maker has grown, Tesla has struggled to provide prompt repair service, and handle customer returns and refunds efficiently.

A small number of Tesla stores will remain open as "galleries, showcases and Tesla information centers," where customers can learn about the company's products, and buy Tesla merchandise.

WATCH: Tesla launches $35K Model 3 with shorter range, new interior

Tesla launches $35K Model 3 with shorter range, new interior
Tesla launches $35K Model 3 with shorter range, new interior