Musk blindsided many sales personnel at the company with the store closings, and some investors and analysts feared the cost-cutting measures sent troubling signals about the state of the company's sales and cash position. If Tesla had gone back on its promise of a $35,000 Model 3, even by a minor 3% increase of $1,050, it would have caused an uproar from consumers.
Tesla just took to its official blog to announce that it would not be closing as many stores as it had initially planned and would be raising prices 3% on select configurations of the Model 3, S, and X, effective March 18th.
In a corporate blog post at the end of February, the electric auto maker said it planned to wind down most of its stores and move to an online-only sales model in an effort to keep prices down while remaining financially sustainable.
It has now confirmed in a statement released yesterday that it will be keeping "significantly more stores open than previously announced".
Reversing a recent decision, Tesla will keep many of its showrooms open and instead raise the price of most of its electric vehicles in a move to help defray the cost. Another 20 percent of store locations are under review and have won a reprieve for "the next few months".
The move also allowed Tesla to introduce its much-anticipated US$35,000 ($50,000) entry-level Model 3 variant.
On Sunday, Tesla changed course on previously announced plans to shift toward online-only sales, announcing it would keep "significantly more stores open".
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Barclays analyst Brian Johnson said it would also be hard to achieve the cost savings needed to lower the price of the Model 3 through store closures alone.
The company gave no numbers, but said it would close only about half the stores that it had meant to.
Buyers will have a week to make their purchases before the higher prices go into effect on March 18, according to the automaker.
Tesla sales have also fallen off steeply since a year ago, according to InsideEVs.
The blog post doesn't give a rationale for why Tesla is backpedaling.
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. Tesla wants to increase its vehicle transportation capacity and cut delivery times. Apparently potential Tesla customers who walk into a store will be shown how to order one on their phones.
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.