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Tesla temporarily freezes store closures and layoffs in chaotic sales strategy change

Tesla is in the middle of a quite chaotic sales strategy transition and now employees are being told that Tesla is freezing current store closures and layoffs at least until the end of the month.

As we previously reported, Tesla launched the long-promised $35,000 version of the Model 3 and CEO Elon Musk said that they plan to make that price viable by moving all sales online only, closing stores, and reducing retail headcount.

We reported last week that Tesla slashed retail employee compensation and they started closing the first wave of stores.

Sources familiar with the matter told Electrek that Tesla has now closed the first 29 stores in the US and Canada.

An unconfirmed number of employees estimated in the few hundreds have been laid off with severance.

Tesla sales management held a call with regional management earlier today and they told retail employees that Tesla was freezing any change from the transition until the end of the month.

Some stores that didn’t close were told to stop booking test drives last week. They were told today that it’s back to business as usual for them, but retail employees don’t have access to commission and bonuses – resulting in much lower compensation.

According to retail associate sources, some retail managers have presented this freeze of the transition as an “opportunity to prove themselves.”

That said, those sources told Electrek that many employees are walking away due to the significant pay cut. Some employees told Electrek that they are suspecting Tesla is extending the transition period and cutting their salary in order to push them out so they don’t have to pay severance.

When asked about the situation, Tesla declined to comment and referred back to a blog post about the move to online sales in which Musk wrote that it will take “months” for Tesla to transfer most of its sales online.

In an announcement to employees, Musk also said that the review of the retail and marketing department would take a few weeks.

Electrek’s Take

This is a chaotic situation for retail employees who are left in the dark for the most part.

It’s either turning into what feels like an extremely poorly managed, haphazard transition or it is intentionally made that way to push out employees like some are suspecting.

It is hard to say which is worse. Probably the latter, which would reek of corporate greed and would be disappointing to see from Tesla.

While others will speculate that this freeze of the transition for a few weeks might be Tesla reconsidering the controversial move, I doubt it. And nothing we’ve heard from official or unofficial channels would back that up.

I think we will see more store closures in a few weeks.

What do you think? Let us know in the comment section below.

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