Tesla will raise prices and backtrack on closing most of its stores

Tesla will raise prices and backtrack on closing most of its stores

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.

The company will be sticking with some tried-and-tested elements of physical auto sales: cars will still be available for test drives at stores, and the shops will also carry a small number of cars in inventory for customers who wish to drive away a Tesla immediately.

The latest announcement reverses those price cuts and most of the store closings. Tesla is walking back its plan to close most retail stores worldwide in a move the company says will force it to raise prices on most of its electric vehicles.

However, there will be no price hike for the cheapest Model 3, which is its cheapest vehicle with a starting price of $35,000 in the USA, around £26,400 in the United Kingdom - although prices for Britain are yet to be confirmed. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and X. All other cars across the automaker's order books are slated to go up in price beginning March 18 by 3 percent. Such a criticism could not be leveled at Tesla's now-closed store in Washington, DC, located in the city's newest and poshest downtown retail location; perhaps this store was one that suffered from "low apparent demand generation".

Tesla's PR notes that all vehicles sales will still be conducted online, though it also states that a small number of vehicles will be on-hand for immediate purchase. However, several high-visibility locations that it closed will reopen "with a smaller Tesla crew", it said.

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In brief: Tesla has backtracked on plans to close virtually all its stores following a move to an online-only sales model.

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

The internal e-mail Musk sent on Sunday may help calm those who remained at Tesla after lay-offs in January, and ongoing job cuts after that.

Barclays analyst Brian Johnson said it would also be hard to achieve the cost savings needed to lower the price of the Model 3 through store closures alone.

Less than a fortnight ago the electric auto maker said it was taking sales nearly entirely online in a move it said would reduce the cost of selling a vehicle by up to 6pc and help lower the cost of its cheapest auto, the Model 3, down to $35,000 (£26,700). 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.

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