Read Elon Musk's memo to employees explaining that Tesla will not close all its stores as it previously said

  • Tesla CEO Elon Musk told employees in an e-mail late Sunday night that the company would be shifting its sales plans yet again.
  • The electric car maker will raise prices by about 3 percent on most of its vehicles after March 18, and will keep more stores open than it had recently planned.
  • Musk said some stores would re-open with fewer employees running them, but others that were in hard-to-find locations, would remain shut.
Elon Musk
Mike Blake | Reuters
Elon Musk

Tesla CEO Elon Musk told employees in an e-mail late Sunday night that the electric car maker would shift its sales plans yet again — raising prices by about 3 percent on most of its cars and keeping more stores open than it had previously planned.

In addition to the e-mail to all employees, Tesla also published a blog post Sunday night, conveying these details to shareholders and the general public.

Tesla caused controversy in recent weeks announcing it would shut its stores and shift worldwide sales to online only. The move was presented as a full embrace of e-commerce, and a cost-cutting measure that would enable Tesla to sell the base version of its electric sedan, the Model 3, at the long-awaited price of $35,000 finally.

Many Tesla sales employees were left wondering whether their stores — and jobs — would be among those immediately cut.

The internal e-mail Musk sent on Sunday may help calm those who remained at Tesla after lay-offs in January, and ongoing job cuts after that.

Tesla did not immediately respond to a request for further information, including which specific stores would be reopening.

Here's the memo in its entirety.

From: Elon Musk

To: Everybody

March 10, 2019

We are making an adjustment to our plans and will, at least for the next several months, retain more stores than previously announced. For the most part, the roughly 10% of Tesla sales locations we closed recently don't pass the Sherlock Holmes test. Meaning, most of these stores are in such difficult or obscure locations, only Sherlock Holmes could find them! Even if selling through stores were our only means of sales, we would still have closed them down. A few stores in high visibility locations that were closed due to low apparent demand generation will be reopened, but with a smaller Tesla crew.

There are another 20% of locations that are under review. Depending on their effectiveness over the next few months, some will be closed and some will remain open.

As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% or so on average worldwide. All things considered, this seems like a reasonable compromise between current and future customers. We will only close about half as many stores, but the cost savings are therefore only about half.

Potential Tesla owners will have a week to place their orders before prices rise, so current prices are valid until March 18th. Note, there will be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and X.

To be clear, all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes. And the generous return policy of 1000 miles or 7 days, whichever comes first, should alleviate the need for most test drives at stores at the potential Tesla owner's request. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.

Thanks,

Elon