Tesla To Shut Most Stores Worldwide

A SpaceX founder and CEO Elon Musk

A SpaceX founder and CEO Elon Musk

Although Tesla is yet to confirm numbers around job losses, Musk did say there would be "some headcount reduction".

Musk said Tesla has been able to lower the price of its Model 3 cars by 6 per cent - finally getting to that long-promised $35,000 price point - by closing its physical shops across the world.

Just over a year ago when Tesla launched Model 3 sales in Canada, the company stated a forthcoming Standard Range model would be priced at $45,600 CAD before incentives and have a range of 354 km.

As for the bad news, Tesla is moving all sales of its cars online. At the same time, Musk announced that the company will close many of its stores and begin selling entirely online and revealed details of Tesla's upcoming Full Self-Driving system.

A US consumer who places an order for the Model 3 at its new lower price now will likely get it by the end of June before a tax credit for electric vehicles is scheduled to be reduced, Musk said.

As for Tesla's profitability, it's retreating from earlier predictions - with Musk acknowledging Thursday the company will remain in the red in the first quarter.

As for the stores, some will be kept open but transition into "galleries" for Tesla cars instead.

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Tesla is shifting all of its sales from stores to the internet, saying the move is needed to cut costs so it can sell the mass-market Model 3 for a starting price of $35,000.

Trading of Tesla shares was halted around 4:58 p.m. ET ahead of the news.

The development came in response to Musk's tweet on February 19 that "Tesla made 0 cars in 2011, but will make around 500k in 2019".

"Taken in conjunction with the introduction of the $35k Model 3, we view this (price cuts) as confirmation that demand for Tesla vehicles has softened", RBC Capital Markets analyst Joseph Spak wrote in a client note. Tesla buyers, on the other hand, will only get a partial credit, because federal law phases out the subsidy after a manufacturer sells 200,000 EVs, and the company hit that threshold past year. What's more, Tesla says it will allow customers to return their vehicle, free of charge, if they decide it's not for them in the first seven days and 1,000 miles of ownership, instead of the usual awkward test drive around the block. It also means Tesla is "winding down" many of its stores. For an extra $3,000, buyers get Autopilot that can "steer, accelerate and brake automatically for other vehicles and pedestrians within its lane".

The Model S Performance loses a little range in comparison - sliding to 315 miles - but gains on speed, with 0-60 mph coming in at 3.0-seconds.

Tesla had $3.7 billion in cash and cash equivalents at the end of December. But Musk said it's "likely" Tesla will bounce back with a profit during the April-June period.

In its annual report released last month, Tesla said it "had established and continue to grow a global network of stores..." The SEC alleged Musk misled investors after concluding he did not have the money to pull off the deal.

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