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Tesla will keep stores open, vehicle price increase coming after March 18

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Tesla has revised its strategy to end down many of its own retail stores in favor of maintaining more stores open, but at the cost of raising the price of Model S, Model X, and some Model 3 variants after March 18.

The upgrade follows Tesla’s recent statement that it would be shifting into an online-only sales model and closing many of its stores as a cost-cutting measure to encourage the new $35,000 Model 3.

“We will be closing some stores, and there’ll be a decrease in headcount…Unfortunately, there’s no way around it,” stated Tesla CEO Elon Musk in a conference call. “We’re sort of in a binary option. Reduce headcount and sell the $35,000 car and have fewer people, or not offer a $35,000 car. ”

However, amid recent store closures and related staffing reductions, Tesla announced on Monday that it has determined to reopen some stores that are in high visibility areas.

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“A few stores in high visibility locations which were closed due to low throughput is going to be reopened, but with a smaller Tesla crew. ” noted Tesla. The business will evaluate the performance of approximately 20% store locations during the next few months before determining if they ought to remain open or close.

Tesla explains that by maintaining more stores open, the company will have to raise the price of Model S, Model X and the more expensive Model 3 variants.

“As a result of keeping significantly more stores open, Tesla will have to raise vehicle prices by about 3% on average worldwide. In other words, we will just close about half as many stores, but the cost savings are therefore only about half. ”

Tesla was expected to additional reduce the price of Model S and Model X after realizing a 5-6% cost reduction from its transition into online-only sales. However, the automobile price increase coming after March 18 will counter those plans until additional store closures take place.W

A copy of Tesla’s blog article describing the new store and pricing upgrade was provided below.

Update on Tesla Stores and Pricing

The Tesla Team March 10, 2019

Last month, we announced that we’d be winding down many of our stores and moving to online-only earnings so as to pass the savings along to our customers.

Over the past two weeks we have been closely assessing every single Tesla retail location, and we have decided to keep significantly more stores open than formerly announced as we continue to evaluate them within the course of several months. When we recently closed 10% of sales locations, we selected stores that didn’t invite the natural foot traffic our stores have always been designed for. These are stores that we’d have closed anyway, even if in-store earnings made up our whole sales model. A few stores in high visibility locations which were closed due to low throughput is going to be reopened, but with a smaller Tesla crew. Moreover, there are another 20 percent of places which are under review, and based on their effectiveness during the next few months, some will be closed and a few will remain open.

As a result of keeping significantly more stores open, Tesla will have to raise vehicle prices by about 3% on average worldwide. In other words, we will just close about half as many stores, but the cost savings are therefore only about half.

Potential Tesla owners will have a week to place their order before prices rise, so present prices are valid until March 18th. There’ll be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, in addition to Model S and X.

To be clear, all sales worldwide will nevertheless be done online, in that potential Tesla owners coming in to stores will simply be shown how to purchase a Tesla on their mobile phone in a few minutes. Along with the generous return policy of 1000 miles or 7 days, whichever comes first, should alleviate the need for many test drives. However, cars will still be available for test drives at stores in the potential Tesla owner’s request. Shops will also carry a small number of cars in stock for customers who wish to drive away with a Tesla immediately.

The article Tesla will keep stores open, automobile price increase coming after March 18 appeared first on TESLARATI.com.

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