Tesla to raise prices, backtracks on closing most stores

Tesla Changes Its Mind Over Store Closures, Raises Prices By 3%

Tesla said last month after announcing a price cut for its flagship Model 3 vehicle that it would shutter most stores in a bid to cut costs and shift more of its sales online. The automaker indicated that as many as half of its stores will stick around, instead of the plan announced earlier this month by CEO Elon Musk to move away entirely from having showrooms. Following that review, some more stores will close, and others will remain open, the company said.

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. Buyers coming into stores will be able to do a test drive, and if they choose to buy a auto, they'll be shown how to do that on their phones.

"When we recently closed 10% of sales locations, we selected stores that didn't invite the natural foot traffic our stores have always been designed for".

Tesla is clearly iterating wildly as it attempts to find the balance of retail store spending and non-value-add overhead on a vehicle purchase, but these wild shifts in employee placement strategies leave their own employees, both former and current, up in the air. The dispute arose after Musk tweeted that he was taking the company private at a price of $420 a share, which the SEC considered false and misleading, and looked to sue Musk for securities fraud. Before the $35,000 Model 3 was available, the cheapest Tesla started at $42,900.

Tesla will raise the price of all its cars, with the exception of the new entry-level Model 3 Standard, by "an average" of 3% worldwide.

At the start of March, Tesla said it would be closing nearly all of its showrooms, and shifting sales to online only. In terms of local pricing that translated to cuts of over 30%. The policy allows new buyers to drive the vehicle for 1000 miles or seven days. It's unclear how that applies to the company's local Australian operations, about which Tesla Australia will not comment.

Tesla shares rose 2.4 percent to $290.92 on Monday. The company hasn't yet clarified why it partly reversed its initial decision, but Engadget has reached out for more information.

Tesla had said less than two weeks ago that it would begin shutting most of its stores in a cost-cutting move created to help reduce the price of its bestselling vehicle, the Model 3, to as low as $35,000.

The SEC fined him $20 million, forced him to step down as Tesla's chairman and required company officials to pre-approve Musk's communications, including tweets.

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