Tesla pumps brakes on plan to shutter all stores

Tesla will raise the price of its vehicles after going back on a recent decision to close most of its stores

The electric car-maker revealed it was backing off its plan to close all of its USA stores in a blog post on Monday. If Tesla had gone back on its promise of a $35,000 Model 3, even by a minor 3% increase of $1,050, it would have caused an uproar from consumers.

Tesla announced on Sunday that it is reversing course on a plan to close all of its brick and mortar retail locations.

The move comes after Tesla said last month it was shifting all sales online to help lower prices by about six per cent on average, allowing it to achieve the relatively low starting fee for the entry-spec Model 3.

In a statement on its website late on Sunday (US time), Tesla said that after close evaluation of "every single Tesla retail location", it has made a decision to keep significantly more open than previously announced. A few stores in high visibility locations will be reopened with smaller crews.

Musk highlighted the importance of logistics once more in a tweet on November, when he noted that Tesla is buying trucking companies to shorten Model 3 delivery times and ensure that orders for the electric sedan will be accomplished before the end of the year.

Tesla has pulled a U-turn on plans to close nearly all of its dealerships while announcing price rises for its more expensive cars.

"Going forward, Tesla does have another (short-term) marketing tool to close the quarter: order now before the March 18th price increases". As a result, Tesla has announced that it will once again adjust its pricing to reflect the additional costs of running retail operations.

As part of that settlement, Musk stepped down as the company's chairman and he and Tesla agreed to pay $20m each in fines.

Tesla said it's backtracking on plans to close most of its stores and hike prices for its costlier auto models.

What is clear is that Tesla sales in 2019 have been disastrous.

The shares erased gains in pre-market trading after the company announced in a regulatory filing that it was issuing about US$13.8 million in stock in connection with an acquisition of car-hauling trucks and trailers from a carrier company north of Los Angeles.

"The price increases will only apply to the more expensive variants of Model 3, as well as Model S and Model X", it confirmed.

On balance, this seems like further evidence that Tesla's initial announcement wasn't really planned.

The blog post doesn't give a rationale for why Tesla is backpedaling.

Tesla was down 0.54%, trading near $282.60 a share early Monday, after the company hit the brakes on its plan to shutter its retail stores. However, cars will still be available for test drives at stores at the potential Tesla owner's request.

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