Tesla Inc. Chief Executive Officer Elon Musk caught many employees by surprise with his announcement last week that the electric-car maker would close most stores and shift to online-only sales, according to three people familiar with the matter.
The abrupt move by Musk, 47, shocked Alex Chalekian, the founder and CEO of Lake Avenue Financial in Pasadena, California. The firm, which manages more than US$150 million in client assets, sold all of the Tesla stock held for advisory clients on Friday. Tesla also suggested a brick-and-mortar retail strategy was important in its annual report filed Feb. 19, just nine days before Musk announced the pivot to online sales.
‘Amazon of Automotive’“Much of the bull narrative has rested on Tesla being the next Apple, selling high-volume EVs at premium price point and at high gross margins, in part aided by a unique branded retail experience,” Brian Johnson, a Barclays analyst, wrote in a report Tuesday. That’s been undercut by the store closings, he said, cutting his price target to US$192, from US$210.
China IssueAfter the full value of U.S. federal tax credits expired at the end of 2018, Tesla has prioritized beginning deliveries of the Model 3 in China and Europe early this year. In an email to employees sent roughly three hours after Tesla published its blog post Thursday, Musk said that 78 per cent of Model 3 orders were placed online last year, rather than in stores. He wrote that some jobs will be transitioned to other areas of the business and that “a small number of stores in high-traffic locations will remain as galleries, showcases and Tesla information centres.”
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