Tesla Abandoning Mall Showrooms to Save Money With Cheaper Retail Locations
Just when we think we know what to expect from Tesla, the electric automaker switches things up. From discontinued models to hiked-up prices to warranty changes, Elon Musk can always be counted on for a surprise, like it or not. For example, if you’re planning to visit a mall showroom soon, brace yourself because you might not find a Tesla dealership there anymore due to a new retail strategy from the company.
A super-concise history of the company
From the beginning, Tesla challenged the norms of car manufacturing, sales, and ownership. Tesla Motors turned the automotive industry on its proverbial head, says Buy Auto Insurance, which explains that the innovative car company did so to protect the environment, the economy, and Tesla drivers.
The story of Tesla Motors dates back to 2003 when a couple of engineers in Silicon Valley founded a company intending to build an all-electric sports car. Much of the funding for the project came from a fellow entrepreneur, PayPal co-founder, Elon Musk. Then, once Musk took the helm, Tesla turned a profit at a time when gas prices were sky-high, and other carmakers were floundering. Today, the Palo Alto-based outfit makes a range of fully electric cars, including the 2021 Model 3.
Tesla’s retail strategies over the years
Tesla’s retail strategy seems to evolve by way of trial-and-error and whatever works at the moment. The 21st-century carmaker never did adhere to the franchise dealer business model and always maintained exclusive showrooms owned and operated by Tesla.
In fact, when Tesla premiered their first cars for sale, the company did so without a middle man. Instead of offering dealership test drives promoted by pushy salespeople, the company installed Tesla Stores in upscale retail centers and high-end shopping malls where potential buyers could learn about but not actually buy a Tesla. They could, however, receive instructions about how to order a Tesla on their phone.
Noting that the U.S. auto industry had been “selling cars the same way for over 100 years,” Musk explained that Tesla Stores appeal to an entirely different demographic than those who typically buy cars at a franchise dealership, reports The Newswheel.
In early 2019, Musk and the company changed things when they announced that Tesla would shut its brick-and-mortar locations and focus on internet sales exclusively. After this announcement, Tesla did indeed close 10% of their mall locations by March. Later, the company shifted strategy again when the carmaker said they would reopen a few “high visibility” storefronts. Tesla also revealed that maintaining said storefronts would force a 3% hike on their car prices worldwide.
In 2020, Tesla pulled another strategy switcheroo when the company opened several new brick-and-mortar Tesla Stores. In July 2021, Tesla announced their third sales strategy change in as many years when they said they would encourage mostly online sales while allowing leases to expire on most Tesla Stores located in malls, reports Teslarati.
The move away from pricey mall leases may save Tesla some rent money but does nothing to help mall owners who count on having a Tesla Store on their premises. In fact, losing Tesla as a tenant may cause financial woes to upscale malls such as Scottsdale Fashion Square in Arizona, Garden State Plaza in Paramus, New Jersey, and Ala Moana Shopping Center in Honolulu, Hawaii, says CNBC.
Where to buy a Tesla today
Tesla shoppers are used to changes by now, so the upcoming move to strictly online car-buying as a presence shouldn’t be a problem. As more and more brick-and-mortar Tesla Stores are shuttered, Tesla makes it easier than ever to order a car with an app or on their website.
Tesla encourages window shoppers and serious car buyers to create an online account that facilitates everything from choosing custom options to taking delivery. At this time, Tesla delivery may not be available in all states due to regulatory restrictions. If there’s still an open Tesla Store near you, you might want to get there before they close for good.