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

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"Reduce headcount and sell the $35,000 auto and have fewer people, or not provide a $35,000 vehicle". Less than two weeks after announcing that he was closing the company's retail stores and letting go the sales staff, it was time for an about turn.

The company gave no numbers, but said it would close only about half the stores that it had meant to.

The move comes after Tesla said last month it was shifting all sales online to help lower prices by about 6 percent on average, allowing it to achieve the $35,000 Model 3 price point earlier than expected. "We will only close about half as many stores, but the cost savings are therefore only about half".

Messages were left Monday seeking comment from a Tesla spokesman.

Before last week's closures, Tesla had 378 stores and service locations worldwide, including 23 outlets in the United Kingdom and Ireland, comprising 18 stores and five service centres.

Despite this quick direction change, Tesla maintains that worldwide sales will be moving to an online model.

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In a turnabout from the store-closing decision that caught staff and investors off guard, the company has since chose to keep "significantly" more locations open, according to a blog post. According to the blog, "these are stores that would have closed anyway". "In addition, there are another 20 percent of locations that are under review, and depending on their effectiveness over the next few months, some will be closed and some will remain open".

While the vehicle price increase certainly isn't something potential buyers will be happy about, Tesla says they'll have a week to place their order before prices rise.

The company stressed that its lowest-priced EV, the $35,000 Model 3, will not get a price hike. Note that the price increase does apply to the more expensive variants of the Model 3.

The company did emphasize that all sales would still be online only-salespeople will show customers how to order vehicles via an app.

Tesla justified online ordering saying that its generous return policy will compensate test drives as buyers can return a auto with seven days or 1,000 miles.

Fortunately, test drives will still be available by request and stores will have a few cars on hand for anyone who decides they need to buy one on the spot. They will keep a limited number of cars so that customers can drive away with a new vehicle immediately.