Tesla Raises Car Prices By 3% To Keep Stores Open

Tesla will raise prices and backtrack on closing most of its stores
Tesla to Raise Prices, Backtracks on Closing Most Stores
Author

12 March, 2019

The Model S and Model X also will be made more expensive, and buyers will have a week to place orders before prices rise.

Tesla still plans to sell the most basic version of the Model 3 for $35,000 even though the vehicle is "excruciatingly difficult" to make at that price, according to CEO Elon Musk.

On Feb. 28, the company said shifting to online sales would allow it to lower all vehicle prices by an average of 6 percent, including its higher-end Model S and Model X. 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. In a turnabout from the decision that caught staff and investors off guard, the company has since chose to keep "significantly" more stores open, it said on its blog.

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. A few stores in high visibility locations will be reopened with smaller crews.

Less than two weeks after announcing a plan to shift all of its sales online in effort to cut costs, Tesla now says it will keep physical stores open and instead raise the prices of a slew of its vehicles. It said it will now "only close about half as many stores" as previously planned.

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The price bump is set to go into effect on March 18, so shoppers still have a week to lock in a Tesla at current prices.

The move comes days after Tesla's announcement that it will sell cars online only to help save costs. "Unfortunately, there's no way around it", said Tesla CEO Elon Musk in a conference call.

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.

"Depending on their effectiveness over the next few months, some will be closed and some will remain open", the statement said. The stores will keep a small inventory on hand for people who want to drive away immediately. Although Tesla said it would concentrate on making up volume in Europe and China, neither of those markets appear able to take up the US' slack. 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. Physical stores will have a small selection for customers who want to test drive a auto or drive one off the lot immediately.


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