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

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

Tesla has backed off a plan to close all its US stores and said it will instead raise prices of its higher-end vehicles by about 3 percent on average.

To soften the blow of the initial announcement, the company used projected savings to reduce prices across its range by around six per cent, while some models in Australia had prices slashed by around $80,000. Model 3 last week, company boss Elon Musk said achieving the long-targeted price for the entry-level variant could only be achieved by cost saving from closing a number of its stores and switching to an online-only sales model.

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

A small number of vehicles will be kept in inventory for customers who wish to drive away with a Tesla immediately.

Potential Tesla vehicle buyers will have a week to place orders before prices rise for the Model S and X, the company said Monday.

Legal experts have said the SEC could try multiple avenues, including a higher fine, imposing further restrictions on Musk's activities or removing him from Tesla's board or helm.

At the time Mr Musk had said the firm's cars were still "too expensive for most people".

The carmaker had claimed complete transition to online sales would allow it to slash prices by 6 percent, and that is how the company would sustain sale of the $35,000 Model 3.

On Monday morning, SEC Chairman Jay Clayton declined to comment when approached by Reuters at an event in Washington on what penalties the agency planned to pursue against the billionaire. Although Tesla said it would concentrate on making up volume in Europe and China, neither of those markets appear able to take up the US' slack. Tesla has now announced that it is going back on those plans.

Separately, Chief Executive Officer Musk has until the end of the day on Monday to explain why he should not be held in contempt for recent tweets that USA securities regulators say violated a September fraud settlement.

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 policy allows new buyers to drive the auto for 1000 miles or seven days.

Shares of the company, among Wall Street's most volatile in recent months, were roughly flat in early trading on Monday. The company hasn't yet clarified why it partly reversed its initial decision, but Engadget has reached out for more information.

A copy of Tesla's blog post explaining the new store and pricing update has been provided below.

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