U.S. electric carmaker Tesla closed its first showroom in China, a move described as a retail strategy shift in its second-largest market.

According to Reuters, Tesla confirmed on November 2 that it had closed the flagship showroom in Beijing’s upscale downtown shopping center Parkview Green.

Parkview Green is a two-floor center. Opening in 2013, it was Tesla’s first showroom in China.

Reuters cited sources saying that Tesla terminated the Parkview Green showroom at the end of October to reduce retail costs.

Tesla has relocated the store to a smaller mall called Raffles City. This showroom just opened in mid-October.

A Parkview employee revealed that their contract with Tesla had expired, but the U.S. carmaker decided not to extend it.

The showroom windows are now plastered with posters belonging to the next tenant.

Earlier Tesla considered shutting down some showrooms in flashy malls in Beijing and other cities due to sparse traffic during COVID restrictions.

The billionaire Elon Musk currently runs more than 200 outlets across China. They display models and arrange test drives for customers.

Over 50% of Tesla’s stores in China do not offer repair or maintenance services and are in high-rent locations where space is limited. The company plans to focus more on stores in less costly suburban locations that can also provide repairs for customers.

In the first nine months of this year, Tesla sold nearly 320,000 vehicles in China. According to the China Passenger Car Association, that number represents an increase of 55% from a year earlier.

According to Bloomberg, Tesla has doubled the capacity of its gigafactory in Shanghai to around 1 million vehicles a year.

With this upgrade, the Shanghai factory is now the largest electric vehicle plant in the world by volume.

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