Analyst: At current sales levels, Tesla could close a third of its stores

Tesla’s sales are down drastically, but its number of locations has grown. That may have to change if Tesla would like to eke out a profit next quarter.

Indeed, without regulatory credits, which are expected to disappear thanks to a new bill, Tesla would have posted a loss last quarter. Things aren’t looking much brighter for Tesla sales this quarter, but there is something Tesla could do about it if it’s unable to goose demand: cut costs.

A well-respected Tesla analyst, who goes by the name Troy Teslike, published a back-of-the-envelope calculation today that estimates the EV maker could close 314 of its 970 stores around the world and still support current sales.

To come up with that conclusion, the analyst divided a country’s monthly sales by the number of stores it had, and calculated how many stores it would have to close in order to reach 180 monthly sales per store, which he says is closer to the historical performance of about 200.

The countries in need of closing the most stores, he found, were China, the UK, Germany, Canada, France, Norway, and Japan. He estimates the US, Tesla’s biggest market, has just two stores too many. The only country where the company could afford more stores is South Korea: it currently has seven but could support 10.

Here’s his full list of recommendations:

Whether Tesla makes such moves remains to be seen.

“I don’t expect Tesla to significantly reduce its store footprint,” Teslike wrote. “It seems the company is slow to adapt to the current environment of lower demand.”