Tesla Plans Price Hikes To Keep Struggling Stores Open

Additionally, a week from now, there will be price increases on all of its vehicles with the exception of the standard range Model 3.

Just a few days ago, Tesla released the cheaper Model 3 and announced sweeping changes to its business model, closing most of its existing physical stores and turn those that remain into showrooms and "information points".

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.

The company stated that it has evaluated all of its stores over the past two weeks and has made a decision to keep "significantly more" stores open than originally anticipated. Such a criticism could not be leveled at Tesla's now-closed store in Washington, DC, located in the city's newest and poshest downtown retail location; perhaps this store was one that suffered from "low apparent demand generation". Now, Tesla said, a few from the already-closed group in high-visibility spots will even be reopened. Following that review, some more stores will close, and others will remain open, the company said.

The price rises, which will come into effect on 18 March, will add around £2160 to the £72,000 starting price of a Model S, and £2400 to the cheapest Model X SUV, now £80,200.

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"As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% on average worldwide", Tesla said. One of the stipulations of this settlement was for Tesla to oversee all of Musk's future tweets to ensure they had no impact on the auto manufacturer's stock price.

Before last week's closures, Tesla had 378 stores and service locations worldwide, including 23 outlets in the United Kingdom and Ireland, comprising 18 stores and five service centres.

According to Tesla's blog, the preference for conducting sales online will continue and said buyers in stores would be trained to order a Tesla on phone, which is a rapid process.

Also Monday, a NY attorney announced that Tesla's former chief of security has filed a whistleblower complaint with the U.S. Securities and Exchange Commission. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.

  • David Armstrong