Tesla backtracks on store closings, price hikes

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The electric-car maker said that keeping more stores open will cause it to raise the price of its cars.

In a February 28 blog post on the Tesla website, it was stated that the electric-automaker would close most of its 378 stores worldwide.

Tesla didn't provide a reason for the U-turn other than saying it followed a two-week evaluation of all the company's retail locations.

The abrupt move earlier this month by CEO Elon Musk, contrasting with an expanding network of retail spaces, sparked concern about Tesla's finances. Tesla on Monday announced an average 3 percent hike in prices for its cars and reversed the decision to close all its physical stores. When we recently closed 10 percent of sales locations, we selected stores that didn't invite the natural foot traffic our stores have always been designed for. If Tesla had gone back on its promise of a $35,000 Model 3, even by a minor 3% increase of $1,050, it would have caused an uproar from consumers.

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. Stores will also have cars available for test drives and "a small number of cars in inventory for customers who wish to drive away with a Tesla immediately", it added.

The company has also bled dozens of top leadership over the past two years as Musk has ramped up production of the Model 3 in order to bring its price down to the $35,000 level.

Tesla has pulled a U-turn on plans to close nearly all of its dealerships while announcing price rises for its more expensive cars.

Tesla said it would close the stores in order to be able sell its EVs more cheaply, but the WSJ pointed out that Tesla would still be on the hook for $1.6 billion worth of leases.

Tesla has never really let up since then, with the company seemingly moving even more vehicles this Q1 2019 as the Model 3 started its European and Chinese push.

After Musk infamously (and falsely) tweeted that he had the necessary funding to take Tesla private in August past year, the executive reached a settlement with the Securities and Exchange Commission. In terms of local pricing that translated to cuts of over 30%.

While the vehicle price increase certainly isn't something potential buyers will be happy about, Tesla says they'll have a week to place their order before prices rise.

'The 3 percent price increase announcement still indicates. strong demand, ' said Ivan Feinseth, an analyst with Tigress Financial Partners.