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Tesla to close stores, shifts to online sales

Tesla is shifting all of its sales from stores to the internet, saying the move is needed to cut costs so it can sell the mass-market Model 3 for a starting price of $35,000.

The Palo Alto, California, company announced the change Thursday and said it's now taking orders for the $35,000 car, which CEO Elon Musk has said is essential to Tesla's survival.

"It's 2019," Musk told reporters. "People want to buy online."

Musk also backed off earlier guidance that the company would be profitable in all future quarters. Because of the moves, it will lose money in the first quarter and was "likely" to be profitable in the second, he said.

The electric-car and solar-panel company will close many of its stores, but leave some open as galleries or "information centers" in high-traffic areas. Musk didn't give  the number of stores that will be closed or how many employees will be laid off. "That isn't today's topic," he said. According to its website, the company has Long Island showrooms in Garden City, East Hampton, Huntington Station and Manhasset.

 Musk said the decision to close stores was hard, but  it's right for the future of the company.

Tesla will offer the standard base Model 3 for $35,000, which can go 220 miles per charge. It also will offer a $37,000 version with a premium interior that accelerates faster and can go 240 miles per charge.

The company started taking orders for the Model 3 in March 2016, but until now hasn't been able to cut costs enough to sell them for $35,000 and make a profit. Until Thursday, the cheapest one that could be ordered started at $42,900.

"This is the only way to achieve the savings for this car and be financially sustainable," Musk said. "It is excruciatingly difficult to make this car for $35,000 and be financially sustainable."

The news was announced after the markets closed on Thursday. Shares of Tesla fell 3 percent in after-hours trading.

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