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

Daniel Fowler
March 12, 2019

The move does not affect Tesla's decision to move all purchases onto the internet, as the stores will simply shift to a policy of helping customers with their online purchases.

Tesla opted to close the "stores that didn't invite the natural foot traffic our stores have always been designed for".

"As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3 percent on average worldwide".

Elon Musk is backtracking from a jarring change in Tesla Inc.'s retailing strategy, keeping numerous company's stores open and raising the prices of its electric cars as a result. Tesla has stated that only the most expensive variants of the Model 3, S and X will be impacted.

The company has now published a blog post which backflipped on this decision.

But in an update the company said that over the past two weeks it had been "closely evaluating every single Tesla retail location" and had "decided to keep significantly more stores open than previously announced".

The automaker explained that all sales worldwide will still be done online, while potential Tesla owners coming in to stores will simply be shown how to order a vehicle using the mobile app. Cars will still be available at stores to test drive.

Because many states mandate that only dealers, not manufacturers, can sell cars in stores, Tesla customers don't technically close the deal at the showroom.

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Tesla said that it would increase the cost of most of its cars by an average of 3 per cent after changing its mind about its physical stores.

Tesla still plans to sell the most basic version of the Model 3 for $35,000 even though the auto is "excruciatingly difficult" to make at that price, according to CEO Elon Musk. Before the $35,000 Model 3 was available, the cheapest Tesla started at $42,900.

Tesla is set to marginally increaser the cost of its cars worldwide as it looks to keep more of its stores open. Given The Economist Intelligence Unit is forecasting consumer price inflation of 2.2% in the USA, this is less than a 1% increase in real terms.

Tesla is still sticking with its plan for all orders for its vehicles to take place online - even in its brick-and-mortar outlets.

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.

"A few stores in high visibility locations that were closed due to low throughput will be reopened, but with a smaller Tesla crew".

A number of Tesla investors are suing company chief executive Elon Musk over his recent tweets.

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