Less than two weeks after Tesla said that it would cut all vehicle prices by an average of 6 percent and shift sales on online only, the electric vehicle (EV) maker is backpedaling on the stores closure plan and is lifting auto prices by 3 percent, except for the $35,000 Model 3.
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.
Ten days after Tesla said that it would close nearly all of its stores, the carmaker has reversed its decision and will be raising the price of its electric vehicles instead.
Less than two weeks after announcing a plan to shift all of its sales online in effort to cut costs, Tesla now says it will keep physical stores open and instead raise the prices of a slew of its vehicles.
Tesla also chose to retain some of the physical stores it had planned to close and will reopen some of the closed retail centers.
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. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.
It is worth noting, that the price hike will not impact the $35,000 base Model 3, only more expensive Model 3 trims, the Model S, and the Model X. We think this was a smart decision in order to avoid consumer backlash.
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Legal experts have said the SEC could now pursue multiple avenues, including a higher fine, imposing further restrictions on Musk's activities or removing him from Tesla's board or helm.
'A few stores in high visibility locations that were closed due to low throughput will be reopened, but with a smaller Tesla crew.
Musk on February 19 tweeted to his more than 24 million Twitter followers that Tesla would make around 500,000 cars in 2019. "Rather, it makes it seem like Tesla is making decisions on the fly and reacting to very short-term factors". As a result, Tesla has announced that it will once again adjust its pricing to reflect the additional costs of running retail operations.
After Musk infamously (and falsely) tweeted that he had the necessary funding to take Tesla private in August past year, the executive reached a settlement with the Securities and Exchange Commission.
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.
The blog post doesn't give a rationale for why Tesla is backpedaling.