In A U-Turn, Tesla Raises Car Prices, Backtracks On Stores Closure

In A U-Turn, Tesla Raises Car Prices, Backtracks On Stores Closure

American electric vehicle maker Tesla has raised auto prices by an average 3 percent, worldwide. Tesla has stated that only the most expensive variants of the Model 3, S and X will be impacted.

As of today, Tesla says it "will only close about half as many stores, but the cost savings are therefore only about half".

That's good news for most of Tesla's sales staff, but not for new customers, who will pay the price for keeping the stores open.

In a blog post late Sunday, Elon Musk's electric-car outfit said it had chose to keep "significantly more" stores open than planned, and will even reopen "a few stores in high visibility locations that were closed due to low throughput...but with a smaller Tesla crew".

Tesla said that sales would still be conducted online with potential buyers "coming in to stores will". Tesla has now announced that it is going back on those plans.

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. "Unfortunately, there's no way around it", said Tesla CEO Elon Musk in a conference call.

According to financial documents found by the Wall Street Journal, the company has obligations worth $1.6bn (£1.2bn) on its retail establishments, and had not initiated discussions with any of its landlords before announcing its intention to close stores.

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

Musk on February 19 tweeted to his more than 24 million Twitter followers that Tesla would make around 500,000 cars in 2019.

The company stressed that its lowest-priced EV, the $35,000 Model 3, will not get a price hike.

Barclays analyst Brian Johnson cut his price target for Tesla shares to US$192 from $210 on March 5, citing concern that the company's ability to sell electric cars at high volumes with strong margins would be undermined by the store closings.

The move made no sense to begin with because Tesla had spent millions fighting in courts and state legislatures trying to change laws that prevented companies from selling vehicles at their own stores, Ramsey said.

Separately, Bloomberg reported on Monday that Tesla is in discussions with Chinese battery maker Contemporary Amperex Technology Co Ltd on a deal for the production of rechargeable batteries for the Model 3.

On Feb. 28, the company said shifting totally to online sales would allow it to lower all vehicle prices by 6 percent, on average, including its higher-end Model S and Model X.

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