Tesla performs U-turn over store closures

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

Tesla will raise prices and backtrack on closing most of its stores

On Sunday, however, the company said it would reduce the number of retail store closures.

Earlier this month Tesla announced that it would be closing the majority of its brick and mortar stores worldwide in order to afford the $US35,000 price tag on the new Model 3, as well as keep the company "financially sustainable". Tesla has stated that only the most expensive variants of the Model 3, S and X will be impacted.

Tesla is walking back plans to close most of its showrooms worldwide and announced price hikes for most of its electric vehicles. 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.

Tesla had closed 10 percent of stores recently.

Remaining stores could have fewer workers, but will have vehicles available for test drives and a small inventory in case people want to buy immediately, the statement said.

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

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Cost savings from store closures will now be only about half the expected amount, Tesla said, as the company will shut half the number of stores it had originally planned.

The price rises, which will come into effect on 18 March, will add around £2160 to the £72,000 starting price of a Model S, and £2400 to the cheapest Model X SUV, now £80,200. "Unfortunately, there's no way around it", said Tesla CEO Elon Musk in a conference call.

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. According to the blog, "these are stores that would have closed anyway". As a result, the company will increase auto prices by about 3% on average, globally. He said the sooner-than-expected arrival of a $35,000 Model 3 likely reflected the need to replenish cash after paying off a $920 million convertible bond and added that weak USA sales early this year also probably hasn't helped.

"To be clear", Tesla's post read, employing a phrase that usually denotes anything but clarity, "all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes".

After spending the last two weeks evaluating every single Tesla location, the company has made a decision to keep more stores open. The company says it still plans to offer buyers the ability to return purchased vehicles at no cost after a seven-day or 1,000 mile test drive.

Tesla's share price rose nearly 3% in early German trading, following the publication of the blog post.

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