Tesla backflips on retail outlet closures, pushing up prices on EVs

Tesla backflips on retail outlet closures, pushing up prices on EVs

Those who have been waiting for the long-promised $35,000 Model 3 will be glad to hear that the entry-level model will not see a price increase.

Tesla is walking back plans to close most of its showrooms worldwide and announced price hikes for most of its electric vehicles.

In a corporate blog post at the end of February, the electric vehicle maker said it planned to wind down most of its stores and move to an online-only sales model in an effort to keep prices down while remaining financially sustainable.

In a Monday filing with government regulators, Tesla now says it closed 10 percent of its stores, but a few of those will now remain open. It has decided after that evaluation that it will keep "significantly more" stores open than it had planned.

When CEO Elon Musk announced the debut of the base, $35,000 Model 3, he said it was only possible by achieving cost savings by closing stores and laying off their employees.

"There will be a pause on store closing and my suspicion is that the performance of the Vancouver stores are above average for Tesla sales and they may all stay open", he said.

Last week, Tesla announced it had secured as much as US$521 million in loans from Chinese banks to build a vehicle and battery factory in the country.

To be clear, all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes.

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At the start of March, Tesla said it would be closing nearly all of its showrooms, and shifting sales to online only.

"As part of Tesla's ongoing logistics strategy to increase its vehicle transport capacity, reduce vehicle transportation time, and improve the timeliness of scheduled deliveries, Tesla agreed to issue shares of Tesla's common stock in connection with its acquisition of certain car-hauling trucks and trailers from Central Valley Auto Transport, Inc". 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.

While the latest announcement will mean that prices will still be lower than they were at the beginning of 2019, they won't be reduced by such huge amounts.

The 3% price increases announced Sunday will apply to the more expensive editions of the Model 3, as well as the Model S sedan and Model X crossover.

The company has now published a blog post which backflipped on this decision.

A Tesla spokesman declined to comment Monday beyond the company's statement.

Tesla was down 0.54%, trading near $282.60 a share early Monday, after the company hit the brakes on its plan to shutter its retail stores.

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