Tesla's Move to Online-Only Stores Makes all Models Cheaper. Win-Win?
Tesla had the big news recently by introducing the long-awaited and forever promised Model 3 that would cost $35,000. But did anyone ask how did they manage to do that?
An online shop is cheaper to run
In order to make the cars more affordable and go down to the magical 35,000 number, Tesla had to cut down on all things that add to the final price, but without lowering the quality of the end product.
One such thing is a showroom store. It takes money to keep it running, and all the cost is spilled over onto the car itself. Without such stores, Tesla was able to cut down the starting price for base Model 3 from $42,900 to $35,000.
But how would one buy a car without seeing it, test driving it, examining the build quality? One might ask.
It is yet unknown how many stores will be closed down in total, but Tesla plans to close “many” of them, and the ones that remain in “high-traffic locations” will instead serve as “galleries, showcases and Tesla information centers.”
All models are cheaper
Thanks to this move all Tesla models are cheaper. The base Model S now starts at $79,000, down from $92,000, while the top dog - Model S performance with 'Ludicrous Mode' is down from $132,000 to $114,000. That's quite the saving.
The same story goes for Model X which now starts at $88,000 and goes up to $119,000. On average, all cars are 6% down in asking price.
There will be layoffs
Naturally, this move will result in people losing jobs. “There’s no other way for us to achieve the savings required to provide [the $35,000 Model 3] and be financially sustainable,” Elon Musk said. "There’s no way around it.”
So for all of you who asked for the cheap Tesla, how do you go to sleep at night?
But will online stores bring the necessary savings? It is one thing to buy a phone case online, but...