Published: Tue, March 12, 2019
Markets | By Otis Pena

Tesla backtracks on decision to close stores, raising prices instead

Tesla backtracks on decision to close stores, raising prices instead

Recently, though, Tesla seems to be somewhat prone to waffling as opposed to sticking with a coherent game plan. Now, Tesla said, a few from the already-closed group in high-visibility spots will even be reopened.

Tesla has announced it will not be closing almost as many stores as it claimed 10 days ago and that it will have to raise prices across its vehicle fleet as a result.

There will be no price increase for the $35,000 Model 3, Tesla said, but added that the increases would apply to the more expensive variants of Model 3, as well as Model S and X. 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.

Now, however, the company has backtracked, saying in a blog post that it has taken a close look at each of its stores and realized it makes more sense to keep a lot of them open.

Tesla made a controversial decision last month when it announced that it would be closing all of its stores and going online only for sales of its EVs.

The Tesla dealership on West 4th Avenue is one of Tesla’s three Metro Vancouver sales outlets.
NICK PROCAYLO  
PNG
The Tesla dealership on West 4th Avenue is one of Tesla’s three Metro Vancouver sales outlets. NICK PROCAYLO PNG

As a result of this, "Tesla will need to raise vehicle prices by about 3% on average worldwide".

Earlier today Tesla announced its long-awaited $US35,000 Model 3. Given The Economist Intelligence Unit is forecasting consumer price inflation of 2.2% in the United States, this is less than a 1% increase in real terms.

Tesla's PR statement offers no context or explanation for why the company has made this dramatic change less than two weeks after unveiling a significantly different strategy.

Anyone who was considering buying a in the near future has only one week to lock in the current pricing.

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. A further 20% of its retail stores will remain open, but will be subject to increased scrutiny as the company decides if they will fall under the knife or not in the coming months. The policy allows new buyers to drive the auto for 1000 miles or seven days. Tesla also pulled the trigger on closing a few high-profile stores that were closed due to low throughput and, having re-evaluated the decision, the company has opted to re-open the stores, with reduced staffing. Though the company noted that most orders occur through the Tesla website, that's probably a function of eager Tesla buyers willing to pull the trigger with not so much as a test drive.

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