Tesla has plans to shift all of its sales online — a move that will significantly reduce its retail footprint nationwide, and possibly also in New Jersey. The car maker made the surprise announcement in a blog post Thursday, when it also announced the launch of its long-anticipated Model 3.
A small number of stores in high-traffic locations will remain open as galleries, showcases and Tesla information centers, according to the post. On Monday, a Tesla representative said the blog post would be “the extent of what we’re sharing at this point.”
It was unclear how these plans would impact Tesla’s five New Jersey locations in Paramus, the Short Hills section of Millburn, Springfield and Cherry Hill. Tesla did not identify which stores will remain open, or when store closures will commence.
Tesla has two locations in Paramus, according to its website.
Tesla has a gallery inside the Garden State Plaza, and a larger center on Route 17, where the company boasts a store, service center and supercharger, near Paramus Park Mall. Retailers in the borough, often described as the retail capital of the county, often go unscathed when national brands announce plans to scale back on their retail footprints.
Closing dealers and other locations throughout the country is a way to absorb the cost of the Model 3. The Model 3 comes with a price tag of about $35,000, a steep drop from Tesla’s Model S and Model X lines that sell for about $69,000 and $78,000, respectively.
Tesla anticipates that by moving its sales online the company will be able to absorb the steep drop in price, the company said. The steep drop, in turn, would make Tesla more attainable for the average consumer.
Tesla’s decision to close physical locations follows a trend that has struck the retail world in 2019. As of March 1, according to Coresight Research, retailers have announced 4,309 store closures in the United States in 2019. It’s unclear if that number included possible Tesla closures.
In Tesla’s blog post, the company said North American consumers can now purchase a Tesla by phone, and that capability will soon be expanding worldwide. The company also said any customer who buys a Tesla could return it withing seven days or 1,000 miles for a full refund — omitting the necessity for consumers to test-drive their vehicles in-store.
In a memo to employees on Thursday — the same day it announced its online-only strategy — Tesla’s chief executive, Elon Musk, said the company’s strategy will likely impact jobs. The memo was obtained and published by CNBC.
“Unfortunately, this means that some jobs will be impacted or transitioned to other areas of the business,” Musk said in that memo. “This is a hard decision, but it necessary to make our cars more affordable.”
In that memo, Musk said the company will be evaluating its sales and marketing teams. The company did not address any pending layoffs in its blog post. In the blog post, the company did say it planned to increase its investment in its Tesla service system by focusing on same-day or same-hour services, with most service shifting to a model where the service would presumably take place at a consumer’s home, rather than having consumers go to a physical location for a service.
Tesla said it planned to increase its in-service technicians, according to the company representative.
