Tesla to close 'many' stores, shift to online-only sales to keep Model 3 at $35k

SAN JOSE, Calif. (KGO) -- A drastic move Thursday by automotive and energy company Tesla. The company announced it would be shutting down "many" stores and shifting to online-only sales. The move could put more drivers in a less expensive Model 3.

The Palo Alto-based company announced the move as the long-awaited, $35,000 Model 3 became available to drivers across North America.

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"This is certainly an example of the drastic measures that it has taken the brand to get this $35,000 vehicle out to market," Jeremy Acevedo said.

Acevedo is the Manger of Industry Analysis at Edmunds.

"The Model 3 is definitely long-awaited," he added. "This is a vehicle that has threatened to disrupt the industry and really has in a lot of ways, even without the $35,000 iteration."

However, with the move to an online-only sales model, some are concerned convenience could impact quality.

Model S owner, Daniel Tran isn't sold on the new one-minute online purchase time estimated by the car company.

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In a Tesla blog, the company wrote, "You can now buy a Tesla in North America via your phone in about 1 minute, and that capability will soon be extended worldwide."

With a little bit of research, Tran argues the retail experience can also move fairly quickly.

"It was quick because I knew what I wanted," he said. "But of course I got to try it and test drive it."

Acevedo with Edmunds explained, "Tesla is rolling out the kind of extended test drive, where there is a guaranteed money back program, in lieu of that test drive experience."

The company said drivers can now return a car within 7 days or 1,000 miles for a full refund.

Model X owner, Archana Mora from San Carlos said the online purchase model is preferred.

"I don't have to deal with salespeople," Mora said. "You get what you see. Like, there's no bargaining, nothing. That's what I like about it."

Tesla estimates its online sales shift will lower all vehicle prices, on average, by 6-percent.

To cut even more costs, "many" of Tesla's 378 stores and service locations will close. ABC7 News was at the Tesla store at Santana Row. Employees couldn't comment on the latest development.

However, with the closing of "many" locations, their jobs are on the line. In January, Tesla fired 7-percent of its workforce in a bid to cut costs. More could be on the way.

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The company explained some locations would remain as galleries, information centers and showrooms.

Mora says it's the sign of the times.

"We are going to stop going to the stores to buy things that'll come to your door," she told ABC7 News.

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