Tesla Reverses Decision To Close Stores, Increasing Prices Instead

Last week Tesla announced that in order to deliver its $35,000 Model 3 to the public it had to cut costs elsewhere. The automaker said it would be closing a number of its showrooms and exclusively selling its vehicles online.

Since its announcement, Tesla has closed 10% of sales locations and will continue to evaluate an additional 20% of its locations for effectiveness, closing ones it deems necessary. This move would have reportedly enabled Tesla to decrease vehicle pricing by 6 percent.

However, Tesla is reversing the original decision to close the majority of its retail stores and instead close between 10-30% of its current portfolio. The 6% price reduction in vehicle cost was intended to be made up by closing its stores but no longer looks to be sustainable. That being said, in order to keep things up and running Tesla will need to raise prices on all Models, minus the low-margin Model 3’s $35,000 Standard Range variant. All other Models are set to go up in price by 3% starting March 18th.

The Model 3 cost will increase by $1,110-$1,740. The Model S by $2,370-$3,420. And the Model X by $2,640-$3,57. It’s unclear, however, if the increase will just be added to the base price of the vehicles, or if certain options will be subject to the price hike.

Tesla stated that all sales will still be done online. If you visit a store you will be guided through the ordering process on their own mobile devices. Retail stores will carry some inventory for buyers who want to take a car home that day and drivers will also still be able to schedule test drives.