Tesla raises prices as Musk backtracks on closing stores

Image iStock

Image iStock

What is clear is that Tesla sales in 2019 have been disastrous.

Tesla is in the process of reviewing the performance of its stores, both in terms of sales and foot traffic, to determine which will stay open.

Electric carmaker Tesla has performed a U-turn on proposed store closures by announcing it will raise prices of its high-end vehicles by around three per cent on average in an effort to retain more dealerships around the world.

Tesla said the worldwide price hikes will apply to the more expensive variants of Model 3, Model S and Model X.

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

On Sunday, the auto maker said that after evaluating the retail stores' locations, it had made a decision to "to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months".

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Purchases will still be done online, with Tesla store sales associates showing prospects how to purchase using the mobile app. Tesla adds that the seven day/1,000 mile return policy should eliminate the need for test drives in most cases, but "cars will still be available for test drives at stores at the potential Tesla owner's request". Late last month, for example, Tesla at long last announced the long-overdue arrival of the $35,000 Model 3. Of course, anyone ordering a Tesla to their home sight unseen will be able to return the auto after 1,000 miles or seven days (whichever is first) thanks to the company's new return policy announced last month. Given The Economist Intelligence Unit is forecasting consumer price inflation of 2.2% in the United States, this is less than a 1% increase in real terms. "In other words, we will only close about half as many stores, but the cost savings are therefore only about half", Tesla stated.

Tesla is still sticking with its plan for all orders for its vehicles to take place online - even in its brick-and-mortar outlets.

The news represents yet another drastic course correction that sets careers off on a different trajectory and destabilizes any semblance of peace across its fleet of retail stores.

Anyone who was considering buying a in the near future has only one week to lock in the current pricing.

A few stores in high-visibility locations that were closed because of low throughput would be reopened with a smaller Tesla crew and would carry fewer cars in inventory.

The most likely explanation for this demand drop, over and above seasonality, is that Tesla did everything it possibly could to pull sales into Q4 in order to qualify the maximum number of buyers for expiring EV tax credits.

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