Elon Musk says Tesla will raise prices and slow down store closures

Tesla Store Los Angeles

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

"As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% on average worldwide", the company said.

It's not yet clear what prompted Tesla to backtrack on its initial announcement, but this latest decision will be mildly offset by an 3 percent increase in the price of cars worldwide, on average. We will only close about half as many stores, but the cost savings are therefore only about half.

With that increase, the base price of the Mid Range Model 3 would rise $1,200 to $42,400 (all prices assuming the mandatory $1,200 destination and documents fee remains the same), for example, and the Long Range Dual Motor all-wheel drive Model 3 would rise from $48,200 to $49,610.

The abrupt move earlier this month by CEO Elon Musk, contrasting with an expanding network of retail spaces, sparked concern about Tesla's finances.

However, amid recent store closures and related staffing cuts, Tesla announced on Monday that it has chose to reopen some stores that are in high visibility areas.

Separately, Bloomberg reported on Monday that Tesla is in discussions with Chinese battery maker Contemporary Amperex Technology Co Ltd on a deal for the production of rechargeable batteries for the Model 3. While this is normal in the auto industry, a close comparison of Tesla's 2019 sales figures shows steeper declines for the company compared to other vendors.

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

Many Tesla sales employees were left wondering whether their stores - and jobs - would be among those immediately cut.

Musk was required as part of a settlement reached with the SEC a year ago - 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. The policy allows new buyers to drive the auto for 1000 miles or seven days.

Shares of Tesla Inc. edged up less than one per cent in Monday trading to US$291. The reduction in retail headcount would allow it to sell the cheapest version of the Model 3 while remaining financially stable. The company hasn't yet clarified why it partly reversed its initial decision, but Engadget has reached out for more information.

Tesla had said less than two weeks ago that it would begin shutting most of its stores in a cost-cutting move created to help reduce the price of its bestselling vehicle, the Model 3, to as low as $35,000.

A copy of Tesla's blog post explaining the new store and pricing update has been provided below.

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