Tesla to close stores and focus online

Electric vehicle manufacturer to wind-down real stores in favour of the virtual market.

With an increase in direct competition from the likes of Jaguar, BWM and VW, Tesla has announced that it will close all but its highest profile stores in favour of online sales.

Tesla Store

A Tesla store Image: Commons

Currently, the US electric car maker has around 90 stores in the US, with an additional 120 sites in Europe, Asia and Australia.

The stores are mainly located in malls and shopping centres and do not include service, parts or other ancilliary departments.  Acting as showrooms only, potential customers can usually book test-drives at the stores which often have a supply of demonstration vehicles close to the site.

Tesla states it can reduce new vehicle prices - in particular the recently-launched Model 3 - while enhancing its service network if it removes the cost of maintaining physical stores.  According to the company: "Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6 percent on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected."

To overcome the argument that potential owners want to see, feel and experience the car before they buy, Tesla has introduced a seven-day, 1000-mile return policy on every new vehicle.  Reflecting Founder Elon Musk's usual confidence in his product, the company stated: "Quite literally, you could buy a Tesla, drive several hundred miles for a weekend road trip with friends and then return it for free. With the highest consumer satisfaction score of any car on the road, we are confident you will want to keep your Model 3."

Tesla sales may also be boosted by the news that another of Musk's innovations recorded a recent success.  The launch of his SpaceX company's Dragon capsule, complete with life-size space-suited dummy, could herald a new ferry service for astronauts to and from the International Space Station.  It is likely to increase confidence in Musk's technological vision, despite the entrepreneur's own admission that he had given the launch just a 10% chance of success!