March 26, 2019

Tesla walks back its plan to close most showrooms

11 March 2019, 05:58 | Hattie Nash

Tesla will raise prices and backtrack on closing most of its stores

Tesla hits brakes on retail store closures, will raise prices instead

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

However, there will be no price hike for the cheapest Model 3, which is its cheapest vehicle with a starting price of $35,000 in the U.S., around £26,400 in the United Kingdom - although prices for Britain are yet to be confirmed. Potential buyers can still test drive cars at the stores, which will "carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately".

The company has been pushed to cut costs in recent weeks having suffered its "most challenging" year in its history.

The price hike won't apply to its much-anticipated $35,000 Model 3 (getting this to market was the reason for the original closure plan) and won't come into effect until March 18 - so you still have a week to get your order in if you've been mulling it over. "Unfortunately, there's no way around it", said Tesla CEO Elon Musk in a conference call.

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Cost savings from store closures will now be only about half the expected amount, Tesla said, as the company will shut half the number of stores it had originally planned.

Tesla says that all sales worldwide will still be done online.

Musk probably realized that he was locked into long-term leases on the stores that he would have to pay regardless of whether they were closed, Ramsey said. 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".

The company said that keeping more stores open will cause it to raise the price of its cars.

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At the end of February, Tesla said it was moving to an online-only sales model and was closing most of its stores in order to slash vehicle prices by 6%.

Shares of Tesla edged up less than 1 per cent in trading early Monday. That's a price point needed to reach more consumers and generate the sales that the company needs to survive, Musk has said.

Earlier today Tesla announced its long-awaited $US35,000 Model 3.

The blog post doesn't give a rationale for why Tesla is backpedaling. He said the sooner-than-expected arrival of a $35,000 Model 3 likely reflected the need to replenish cash after paying off a $920 million convertible bond and added that weak US sales early this year also probably hasn't helped.

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