Published: Tue, March 12, 2019
Business | By Eloise Houston

Tesla Changes Its Mind Over Store Closures, Raises Prices By 3%

Tesla Changes Its Mind Over Store Closures, Raises Prices By 3%

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 backed off a plan to close all its USA stores and will instead raise prices of its higher-end vehicles by about 3 percent on average.

On Sunday, Tesla changed course on previously announced plans to shift toward online-only sales, announcing it would keep "significantly more stores open". The company also announced that it would be closing almost all of its stores and that the Model S and Model X would also see some slight price reductions.

On Sunday, the auto maker said that after evaluating the retail stores' locations, it had made a decision to "to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months".

Tesla notes that all sales will still be made online; anyone wanting to buy in a store will simply be shown how to use the online system.

Last month, the electric-car maker announced it was shifting to online-only sales and closing most of its 378 retail stores.

Those who have been waiting for the long-promised $35,000 Model 3 will be glad to hear that the entry-level model will not see a price increase. Sales of the Model 3 have fallen almost 80 percent since that time.

"A few stores in high visibility locations that were closed due to low throughput will be reopened, but with a smaller Tesla crew". It also confirmed that to afford selling the new model at this price it would need to close most of its brick and mortar stores over the next few months.

Cost savings from store closures will now be only about half the expected amount, Tesla said, as the company will shut half the number of stores it had originally planned.

The increased pricing will be introduced after March 18, so potential buyers have a week left to lock in a Tesla with the current pricing.

Separately, Bloomberg reported on Monday that Tesla is in discussions with Chinese battery maker Contemporary Amperex Technology Co Ltd on a deal for the production of rechargeable batteries for the Model 3.

And despite test drives being one of the biggest draw cards of the stores, the company is confident that its "1000 miles or 7 days" return policy will negate customers' need to try a very expensive auto before they actually buy one.

Tesla Inc chief executive Elon Musk shot back against the U.S. financial regulator on Monday, arguing in a filing that a recent tweet about the electric vehicle maker's production volume did not violate the court's judgment and there is no basis to issue contempt against him.

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