Tesla to rise price of its cars and keep more stores open

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Tesla said those stores that will be saved will have fewer cars in inventory with the outlets more focused on providing customer information and test drives rather than vehicles for purchase.

Tesla also suggested a brick-and-mortar retail strategy was important in its annual report filed February 19, just nine days before Musk announced the pivot to online sales.

After spending the last two weeks evaluating every single Tesla location, the company has chose to keep more stores open. Musk described the winding down of many stores as a cost-cutting move that would enable Tesla to offer a long-promised $35,000 version of the Model 3 sedan, the automaker's first mass-market vehicle. As a result, the company will increase vehicle prices by about 3% on average, globally.

The price hikes will go into effect in a week, giving potential buyers a chance to place orders before that happens.

In total, this means Tesla will take back its original decision to close the majority of its retail stores and instead close between 10 and 30 percent of its current portfolio.

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All Tesla sales will still be conducted online, and the showrooms will remain to show clients how to order a Tesla on their phone. A few stores in high visibility locations will be reopened with smaller crews. "In other words, we will only close about half as many stores, but the cost savings are therefore only about half", Tesla stated.

On Sunday, Tesla changed course on previously announced plans to shift toward online-only sales, announcing it would keep "significantly more stores open". Physical stores will have a small selection for customers who want to test drive a vehicle or drive one off the lot immediately.

Tesla will raise the price of all its cars, with the exception of the new entry-level Model 3 Standard, by "an average" of 3% worldwide. The 7-day/1,000 mile test drive policy will still apply as well, though test drives will still be available in stores.

"Slightly more worrying, though, is Tesla's flip-flop on its store closures".

Less than a fortnight ago the electric auto maker said it was taking sales nearly entirely online in a move it said would reduce the cost of selling a vehicle by up to 6pc and help lower the cost of its cheapest auto, the Model 3, down to $35,000 (£26,700). He said the sooner-than-expected arrival of a US$35,000 Model 3 likely reflected the need to replenish cash after paying off a US$920 million convertible bond and added that weak USA sales early this year also probably hasn't helped.