Tesla raises prices as Musk backtracks on closing stores

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

Tesla to Raise Prices, Backtracks on Closing Most Stores

Musk blindsided many sales personnel at the company with the store closings, and some investors and analysts feared the cost-cutting measures sent troubling signals about the state of the company's sales and cash position. Tesla touted that move as a time and money saver, with the company passing on a 6 percent savings to the buying customer.

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". Tesla on Monday announced an average 3 percent hike in prices for its cars and reversed the decision to close all its physical stores. Before the $35,000 Model 3 was available, the cheapest Tesla started at $42,900.

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. And whether those numbers are directly involved or not, the company changed course, announcing late Sunday that it's not happening in such a sudden and comprehensive way.

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The move comes days after Tesla's announcement that it will sell cars online only to help save costs. Tesla stores are usually found close to city centers in popular locations, rather than alongside out-of-town dealerships.

The electric vehicle manufacturer announced February 28 that it was planning on closing nearly all of its physical stores and switching to a purely online sales model, Business Insider reported.

"As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3 percent on average worldwide", a company statement said. Another 20 percent of stores are still under review and may close over the coming months, depending on their effectiveness. 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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Tesla did not immediately respond to a request for further information, including which specific stores would be reopening.

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. The 7-day/1,000 mile test drive policy will still apply as well, though test drives will still be available in stores. Sales of the Model 3 have fallen almost 80 percent since that time.

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