SAN FRANCISCO — Tesla Inc. CEO 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.
Many sales personnel found out about the decision when Tesla published a public blog post Thursday afternoon, said the people, who asked not to be identified discussing sensitive matters. One of the key people involved in implementing the online sales strategy is Sanjay Shah, who has taken on additional responsibilities since his arrival from Amazon last summer, the people said. He joined Tesla as senior vice president of energy operations and continues to oversee that business.
Tesla declined to comment on the sales shift beyond the Thursday blog post and a Musk email to employees later that day.
The abrupt move also shocked some investors, including Alex Chalekian, founder and CEO of Lake Avenue Financial in Pasadena, Calif. The firm, which manages more than $150 million in client assets, sold all of the Tesla stock held for advisory clients Friday.
"This was a total 180-degree turn," Chalekian, who owns a black Tesla Model S, said in a phone interview Monday. "Tesla had been talking about expanding stores, and all of a sudden, they are closing them. To me, this signals a huge financial concern and a possible cash-flow issue for Tesla."
The stock has dropped about 11 percent since Thursday, shaving almost $6 billion from Tesla's market value. The shares finished Monday at $285.36, the lowest level since Oct. 22.
Until last week, Tesla's store strategy seemed to be one of expansion. The company opened 27 retail and service centers last quarter, resulting in 378 locations worldwide, according to its letter to shareholders. It was the most openings for a quarter since mid-2017.
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.
"Our Tesla stores and galleries are highly visible, premium outlets in major metropolitan markets, some of which combine retail sales and service," Tesla said in its 10-K filing. "Opening a service center in a new geographic area can increase demand. As a result, we have complemented our store strategy with sales facilities and personnel in service centers to more rapidly expand our retail footprint."
Tesla already has closed several stores, including one at the International Market Place in Honolulu and another at the Gardens on El Paseo near Palm Springs, Calif. Calls to those stores now ring through to Tesla call centers in Las Vegas and Fremont, Calif.