Economy

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 says that stores will cary a "small number" of cars in inventory so that some buyers can drive away in a Tesla right away.

However, Tesla clarified that a price hike will only apply to costly models such as variants of Model 3, Model S and Model X.

In a blog post Sunday, the company announced it would "keep significantly more stores open than previously announced".

Tesla said it has closed around 10% of its stores in areas of low footfall, but said a small number of those would now be reopened.

As a result of keeping these additional stores open the electric carmaker has stated that prices are expected to rise by "about three per cent on average worldwide".

The step backwards will come as a hit to customers as well, as Tesla will raise prices 3% on all S and X vehicles as well as all of the Model 3 configurations other than the $35,000 configuration to account for the remaining stores.

The news reads more like a stay of execution than a pardon, but surely comes as welcome news to the thousands of retail employees staffing its stores around the world that were left not knowing if they would even have jobs in the coming days or weeks after the company made a decision to close most of its stores.

Despite this possible reprieve for the thousands of retail workers at Tesla, Musk's email and the blog post state that sales will remain online only, and that the stores will exist just to show people how to order a auto "on their phone in a few minutes".

The company did emphasize that all sales would still be online only-salespeople will show customers how to order vehicles via an app.

Until recently, Tesla's store strategy seemed to be one of expansion.

And despite test drives being one of the biggest draw cards of the stores, the company is confident that its "1000 miles or 7 days" return policy will negate customers' need to try a very expensive vehicle before they actually buy one.

Musk has promised a $35,000 price tag for the Model 3 since the vehicle was first unveiled in 2016.

Shares of the company, among Wall Street's most volatile in recent months, were roughly flat in early trading on Monday.

The carmaker had claimed complete transition to online sales would allow it to slash prices by 6 percent, and that is how the company would sustain sale of the $35,000 Model 3.

At the time, Musk also walked back the company's guidance that it would be profitable in all future quarters, saying it would post a loss in the first quarter of this year.



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