Elon Musk says Tesla will raise prices and slow down store closures

12 March, 2019, 07:59 | Author: Mary Valdez
  • Tesla backtracks on store closings price hikes

In brief: Tesla has backtracked on plans to close virtually all its stores following a move to an online-only sales model. Instead, the company said in a statement, many of its best performing locations will stick around.

In a blog post, Tesla said it would keep "significantly more stores open than previously announced", and support the ability to produce the base-level $35,000 Model 3 by raising prices about 3 percent on other, higher-end models. It added that the future of another 20% of locations will be under review in the next few months.

As of today, Tesla says it "will only close about half as many stores, but the cost savings are therefore only about half". All the rest appear safe, for now.

The renewed public battle between Tesla's chief executive and the top US securities regulator adds pressure on Musk, the public face of Tesla, who is struggling to make the company profitable after cutting the price of its Model 3 sedan to $35,000. One of the stipulations of this settlement was for Tesla to oversee all of Musk's future tweets to ensure they had no impact on the vehicle manufacturer's stock price. Stores will also have cars available for test drives and "a small number of cars in inventory for customers who wish to drive away with a Tesla immediately", it added. It also has locations on Long Island, in Westchester and in Northern New Jersey.

The news reads more like a stay of execution than a pardon, but surely comes as welcome news to the thousands of retail employees staffing its stores around the world that were left not knowing if they would even have jobs in the coming days or weeks after the company chose to close most of its stores.

Tesla has cut thousands of employees since the start of the year as the carmaker continues to overhaul its operations to hit profitability.

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All Tesla sales will still be conducted online, and the showrooms will remain to show clients how to order a Tesla on their phone.

Musk was required as part of a settlement reached with the SEC past year - over "misleading" tweeted claims about having secured funding to take the company private - to have social media posts containing material content approved before sending them.

In this June 14, 2018, file photo, Tesla CEO Elon Musk speaks at a news conference in Chicago.

But Musk's lawyers argued on Monday that the tweet complied with the company's communication policy for senior executives and that the US Securities and Exchange Commission's request that Musk be held in civil contempt is incorrect on the facts and on the law. Given The Economist Intelligence Unit is forecasting consumer price inflation of 2.2% in the United States, this is less than a 1% increase in real terms.

DON'T MISS: Tesla Model 3 Standard Range arrives soon at $35,000 and 220 miles.

"Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected", the company said.

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