In a new email to employees, Tesla CEO Elon Musk acknowledged some “uncertainty” among the company’s salespeople regarding the sales strategy transition as he tries to reassure them with more details about his plans and expectations.

Tesla’s retail employees had quite a disturbing month.

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

Following the announcement, Tesla slashed retail employee compensation and started closing the first wave of stores.

A few days later, we reported that Tesla froze its store closures and layoffs as part of the chaotic sales strategy change.

Then, less than 2 weeks after announcing the transition, the automaker announced some important changes to the strategy change, including leaving most stores open and moderately raising prices back up again.

The entire ordeal left many employees feeling uncertain about their future at the automaker and now Musk is trying to remedy the situation with more details about his plans and his expectations of Tesla’s retail team.

Several people familiar with the matter sent Electrek the following email from Elon today:

There still some uncertainty around Tesla stores and the sales team. Hopefully, this note clears things up. Please let me know if there’s anything I’ve forgotten to address.

– Stores with a high visitation rate and that lead to significant sales will absolutely not be closed down. It would not make any sense to do so, except in rare cases where the rent is absurdly high. Moreover, Tesla will continue to open stores throughout the world that meet the above criteria.
– Stores that are in a location with low visitation rates (ie empty most of their opening hours) and lead to low sales will gradually be closed down. This is analogous to seeds on barren ground. There is no reasonable way to justify keeping such stores open.
– Stores that are somewhere in the middle will be evaluated over time to see there is some way to allow them to cover their costs. If there is, they will remain open, otherwise not. However, these stores will be given a fair opportunity to prove their case.
The above principles also apply to the sales team. No one who is a major contributor to demand generation will be let go. That would make no sense. However, sometimes, in a company with 45,000 people, things happen that make no sense. I will do my best to remedy issues when brought to my attention directly or through [redacted email address].
What is 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. This is true whether they are at home or in a store. Unlike buying from other carmakers, ordering a Tesla doesn’t require any *physical paperwork*.
This is very different from normal expectations for buying from other carmakers and is simply meant to emphasize that ordering a Tesla is super easy and can be done in 2 minutes from your phone or laptop at Tesla.com. Ordering a Tesla is not much harder than ordering an Uber, but hardly anyone knows this!
However, many potential Tesla owners will still want to talk to a Tesla representative in person or want a test drive from a Tesla representative. Stores also have a small number of Tesla vehicles available to drive away immediately for customers that want a car right then and there.
This is why stores and Tesla product specialists and owner advisors will always be of critical importance to our long term success.
Thanks,
Elon

Electrek’s Take

This is turning out almost exactly how I said it looked when I wrote about the strategy change disguising an important compensation reduction for retail employees.

It’s clear that the job didn’t change much for the most part and it is more about Tesla looking at inefficiencies throughout the organisation, which is normal.

The least performing stores and employees should be let go, but that’s not how it was announced in the first place.

In hindsight, it shouldn’t have been presented as this important move to online sales. It should have more simply be a revaluation of Tesla’s retail effort.

It looks like Tesla grossly undervalued the important on its retail staff when it came to the buying experience. We highlight that in surveys that we posted versus the data shared by Tesla in the original announcement.

At least, Elon seems to be open about the possibility to correct unjust situations regarding the reorganization.

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


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