Tesla to raise vehicle prices, keep more stores open

Roman Schwartz
March 12, 2019

Tesla on Sunday pulled a U-turn on its plan to close all its retail stores.

In a post on the company's website, the automaker stated it has now "decided to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months".

When CEO Elon Musk announced the debut of the base, $35,000 Model 3, he said it was only possible by achieving cost savings by closing stores and laying off their employees. To pay for this, the EV maker is raising the price of its cars by about 3 percent on average worldwide on March 18.

The carmaker said the 3% price rise would not apply to the new mid-market Model 3.

In total, this means Tesla will take back its original decision to close the majority of its retail stores and instead close between 10 and 30 percent of its current portfolio.

The SEC submission says the go-private plan was discussed internally at Tesla many days before Musk's tweet "and that many were suspect of the purported deal's legitimacy", Meissner's statement said. A few stores in high visibility locations that were closed due to low apparent demand generation will be reopened, but with a smaller Tesla crew.

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Earlier this month Tesla announced that it would be closing the majority of its brick and mortar stores worldwide in order to afford the $US35,000 price tag on the new Model 3, as well as keep the company "financially sustainable".

In a blog post late Sunday, Elon Musk's electric-car outfit said it had made a decision to keep "significantly more" stores open than planned, and will even reopen "a few stores in high visibility locations that were closed due to low throughput...but with a smaller Tesla crew". According to CNBC, which received a copy of the email, Musk wrote that the company would now be keeping many of its unclosed stores open, and would even reopen some of the now-shuttered locations. Tesla will offer vehicles for test drives at its stores at the buyer's request, and there will be a small number of cars in inventory for those who want to drive off in their new auto the same day. Some stores will also have a small number of cars available for immediate delivery.

The case is the latest major challenge by authorities to Musk's leadership as Tesla seeks to make good on his promises to Wall Street that it will soon by consistently profitable and will not need more capital. The return policy of 1000 miles or 7 days also remains in place.

Tesla is in the process of reviewing the performance of its stores, both in terms of sales and foot traffic, to determine which will stay open.

Tesla has finally launched the $35,000 Model 3.

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