Published: Wed, March 13, 2019
Money | By Arnold Ball

Tesla to raise prices and keep more stores open

Tesla to raise prices and keep more stores open

As a result of the closures the electric-car maker would be able to keep the price of its new mid-market Model 3 at US$35,000.

Tesla last month said it will close "many" of its 378 stores as it moves to online-only sales, but in Sunday's announcement the company said it will revise lower the number it closes. Tesla hasn't announced how many stores will remain open, but the company says it will be reopening "high visibility locations that were closed due to low throughput", along with a handful of other stores that are now being evaluated for effectiveness.

The store-closing reversal shows that Tesla had second thoughts about shuttering the stores and whether buyers would make such a large purchase without a test drive. Because many states mandate that only dealers, not manufacturers, can sell cars in stores, Tesla customers don't technically close the deal at the showroom.

Elon Musk noted then that Tesla has moved from "production hell" to "delivery logistics hell", referencing the company's struggles to get the vehicles it was producing to delivery centers where they can be picked up by their owners.

After Musk infamously (and falsely) tweeted that he had the necessary funding to take Tesla private in August a year ago, the executive reached a settlement with the Securities and Exchange Commission.

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"The fact that the Tesla's auto prices are going up by 3% is not worrying in itself". Traditional test drives will still be available at stores, which the firm said will also keep a small stock of cars for customers who wish to drive one away immediately. In terms of local pricing that translated to cuts of over 30%. The return policy of 1000 miles or 7 days also remains in place.

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

The settlement between Musk, Tesla and the SEC resolved an SEC lawsuit over claims Musk made on Twitter in August that he had "funding secured" to take Tesla private at $420 per share.

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.

On Feb. 28, the company said shifting totally to online sales would allow it to lower all vehicle prices by 6 percent, on average, including its higher-end Model S and Model X. That tweet, the SEC argued, violated a September fraud settlement barring Musk from sharing material information about Tesla on social media without the company's pre-approval.

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