Tesla to raise prices, backtracks on closing most stores

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Tesla to raise prices, backtracks on closing most stores

Analysts say the company's sudden reversal of plans adds to investor concerns that it lacks a cohesive strategy for growing into a major global automaker.

Tesla now claims it will only be closing stores that it would have already meant to close, no matter what.

Tesla just took to its official blog to announce that it would not be closing as many stores as it had initially planned and would be raising prices 3% on select configurations of the Model 3, S, and X, effective March 18th.

On Sunday, Tesla changed course on previously announced plans to shift toward online-only sales, announcing it would keep "significantly more stores open". Musk described the winding down of many stores as a cost-cutting move that enables Tesla to offer a long-promised US$35,000 version of the Model 3 sedan, the automaker's first mass-market vehicle.

Telsa notes that over the last two weeks it has closely evaluated all Tesla retail locations.

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".

The electric car-maker revealed it was backing off its plan to close all of its USA stores in a blog post on Monday.

As a result of this, "Tesla will need to raise vehicle prices by about 3% on average worldwide". Before the $35,000 Model 3 was available, the cheapest Tesla started at $42,900.

Musk, 47, described the store wind-down announced on February 28 as a cost-cutting move that enabled Tesla to offer a long-promised US$35,000 version of the Model 3 sedan, the automaker's first mass-market vehicle.

A few stores in high-visibility locations that were closed because of low throughput would be reopened with a smaller Tesla crew and would carry fewer cars in inventory.

Anyone who was considering buying a in the near future has only one week to lock in the current pricing. Tesla has now announced that it is going back on those plans.

Unlike other carmakers, Tesla runs its own showrooms, rather than use a network of dealers. The return policy of 1000 miles or 7 days also remains in place.

To soften the blow of the initial announcement, the company used projected savings to reduce prices across its range by around six per cent, while some models in Australia had prices slashed by around $80,000.

The most likely explanation for this demand drop, over and above seasonality, is that Tesla did everything it possibly could to pull sales into Q4 in order to qualify the maximum number of buyers for expiring EV tax credits.

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