Tesla Confirms Layoffs, Will Close Stores After Standard Model 3 Price Announcement

After a wait of two years, Tesla Inc. has finally launched its cheaper, standard Model 3 with a base price of $35,000.

But this long-sought announcement comes at a steep price for Tesla employees -- the company said it will fire employees and close stores since orders for the standard Model 3 will all be made online and on mobile devices.

Last month, Tesla said it will fire more than 1,000 employees at its various offices and facilities in California to severely slash costs in order to keep its Model 3 all-electric sedan alive.

Because sales of the standard Model 3 will all be online, Tesla CEO Elon Musk said the company will close an unspecified number of stores and lay-off more employees. He said these moves are aimed at saving money and lowering the price of the car to its base level of $35,000.

“There’s just no way around that,” said Musk. “I wish there was some other way.”

"It is excruciatingly diffuclt to make this car for $35,000 and still be financially sustainable,” he said, while adding that it will take another two to three years before Tesla can produce a cheaper car.

The layoffs continue a pattern that began in late 2017 when Tesla fired hundreds of employees. In June 2018, Tesla fired more than nine percent of its workforce. Tesla had 37,500 employees at the end of 2017, so nine percent of this total amounted to some 3,400 employees.

Tesla will close many of its stores but will leave some open as galleries or “information centers” in high-traffic areas. Southern California is home to some 15 Tesla stores. Closures will fling hundreds of employees out of work.

Musk didn’t give a number of stores that will be closed or employees who will be laid off. “That isn’t today’s topic,” he said.

Tesla announced the base or standard model of the Model 3 will have 220 miles of range, a top speed of 130 miles-per-hour and can accelerate from 0 to 60 mph in 5.6 seconds.

Tesla said it will also change the customer shopping experience by allowing customers to drive the Model 3 before buying. It will also offer full refunds if a Model 3 is returned within seven days or 1,000 miles.

“You can buy your car on your phone in about one minute in the U.S.,” said Musk. “We will still have stores, but they will be converted to galleries and information centers.”