Tesla changes tack: More stores to remain open, prices rise to compensate

Tesla Changes Its Mind Over Store Closures, Raises Prices By 3%

Tesla now claims it will only be closing stores that it would have already meant to close, no matter what.

Just two weeks after Tesla announced it would close most of its stores and move to an online sales model, the electric auto maker has reversed course. A few stores in high visibility locations that were closed due to low apparent demand generation will be reopened, but with a smaller Tesla crew. It said it will now "only close about half as many stores" as previously planned. All the rest appear safe, for now.

Tesla explains that by keeping more stores open, the company will need to raise the price of Model S, Model X and the more expensive Model 3 variants.

Unlike other carmakers, Tesla runs its own showrooms, rather than use a network of dealers.

A decision by Telsa to back away from plans to close its retail outlets worldwide is good news for Vancouver, says electric-car analyst Matthew Klippenstein. Tesla will offer vehicles for test drives at its stores at the buyer's request, and there will be a small number of cars in inventory for those who want to drive off in their new auto the same day. It also has locations on Long Island, in Westchester and in Northern New Jersey.

The Tesla dealership on West 4th Avenue is one of Tesla’s three Metro Vancouver sales outlets.
NICK PROCAYLO  
PNG
The Tesla dealership on West 4th Avenue is one of Tesla’s three Metro Vancouver sales outlets. NICK PROCAYLO PNG

As part of that settlement, Musk stepped down as the company's chairman and he and Tesla agreed to pay $20m each in fines.

Musk was required as part of a settlement reached with the SEC past year - over "misleading" tweeted claims about having secured funding to take the company private - to have social media posts containing material content approved before sending them. 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. Ramsey asked. "It's nearly as if the decision was announced and made without any analysis of what the outcome would be". Perhaps realizing that closing the majority of its stores was a short-sighted move, the company over the weekend announced that it will keep most of its stores open and that the promised price cuts for the Model S and Model X won't be implemented.

A Tesla spokesman declined to comment Monday beyond the company's statement.

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. 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.

The three percent increase on its top-end cars would be the first hike in prices after a series of cuts over the past year aimed at offsetting a reduction in green tax credits and the impact of rising tariffs overseas.

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