Elon Musk memo about cheaper model 3, store closure


Tesla CEO Elon Musk on Thursday sent an e-mail to employees explaining the company's decision to reduce its staffing in its sales and marketing divisions, according to a copy of the memo sent to CNBC.

News of the upcoming layoffs comes as Tesla announced that $ 3,000 model 3 sales were finally available, adding that all Tesla vehicle sales would be moving exclusively online. As part of the announcement, Musk also warned that the company will not make a profit in the first quarter, reducing Tesla's stock price to more than 3% on Thursday night.

Last month, I noted in my email that the key issue that Tesla must overcome is that our products remain very expensive for most people. We know that there are many people who want to buy Model 3, but simply can not do it.

That's why we're excited to announce today that we're now offering the standard $ 35,000 model. This is a significant milestone for Tesla, the culmination of years of hard work by employees throughout the company and something that all of you should be proud of. You can read the details of the ad in our blog: LINK HERE

In addition, we are also making the decision to transfer all sales worldwide to just online.

Last year, 78% of all Model 3 orders were placed online rather than in a store, and 82% of customers purchased their Model 3 without ever having a test drive. Customers can now purchase a Tesla in North America through their phone in about 1 minute, and that capability will soon be extended around the world. We're also making it much easier to try and return a Tesla without a test drive. You can now return a car within 7 days or 1,000 miles for a full refund. Customers are becoming increasingly comfortable shopping online, and this is especially true for Tesla – which is a testament to the products we manufacture.

As a result, over the next few months, we will be closing many of our stores and significantly reducing our sales and marketing spend, which will help make the price changes we announce today possible. Changing all online sales combined with other ongoing cost efficiencies will allow us to reduce all vehicle prices by about 6% on average, allowing us to reach the Model 3 price of $ 35,000.

A small number of high-traffic stores will remain as galleries, shop windows and Tesla information centers. At the same time, we will increase our investment in Tesla's service and manufacturing system, and I expect the number of employees to grow next year.

Unfortunately, this means that some jobs will be affected or transferred to other areas of the business. This is a difficult decision, but it is necessary to make our cars more accessible. Our sales force has struggled on the front lines of our mission's advancement and has been our connection to hundreds of thousands of customers along the way. I want to express my sincere gratitude for everything you've done.

In the coming weeks, we will be evaluating all of our sales and marketing organization to understand where there are operating efficiencies, and how best to support the transition to online sales, while continuing to deliver a truly incredible and educational Tesla buying experience.

We'll share more information about this transition soon.

Thank you,


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