Tesla Raises Car Prices By 3% To Keep Stores Open

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

"The fact that the Tesla's auto prices are going up by 3% is not worrying in itself". 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.

It will now close "about half as many" stores - making half the cost savings.

Tesla has revised its plan to wind down many of its retail stores in favor of keeping more stores open, but at the expense of increasing the price of Model S, Model X, and some Model 3 variants after March 18.

"Over the past two weeks we have been closely evaluating every single Tesla retail location, and we have made a decision to keep significantly more stores open than previously announced", the electric vehicle maker said.

The electric-car maker said that keeping more stores open will cause it to raise the price of its cars.

The abrupt decision by Chief Executive Officer Elon Musk to wind down stores after years of expanding Tesla's network of retail spaces sparked concern about the company's finances.

Tesla said it has closed around 10% of its stores in areas of low footfall, but said a small number of those would now be reopened.

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The company stressed that its lowest-priced EV, the $35,000 Model 3, will not get a price hike.

So, to keep more stores open, Tesla will be raising its prices by an average 3%-though not the price of the cheapest Model 3.

The case is the latest major challenge by authorities to Musk's leadership as Tesla seeks to make good on his promises to Wall Street that it will soon by consistently profitable and will not need more capital. Tesla says that stores will cary a "small number" of cars in inventory so that some buyers can drive away in a Tesla right away.

The move made no sense to begin with because Tesla had spent millions fighting in courts and state legislatures trying to change laws that prevented companies from selling vehicles at their own stores, Ramsey said. The vehicle firm is backtracking on its plans to close most of its stores worldwide after a period of evaluation.

And despite test drives being one of the biggest draw cards of the stores, the company is confident that its "1000 miles or 7 days" return policy will negate customers' need to try a very expensive auto before they actually buy one.

Tesla was down 0.54%, trading near $282.60 a share early Monday, after the company hit the brakes on its plan to shutter its retail stores.

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