Tesla Abandons Last Week's Decision to Close Stores, Will Increase Prices Instead

Elon Musk’s late-night announcement to raise prices and reopen some stores

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. InsideEVs, a publication close to Tesla, tracks United States electric vehicle deliveries and according to its numbers, January and February deliveries were down by around 80 percent compared to the months leading up. In a turnabout from the decision that caught staff and investors off guard, the company has since chose to keep "significantly" more stores open, it said on its blog.

Electric carmaker Tesla has reversed a previous decision to close most of its stores and move to online-only sales in order to pass the savings along to customers. Tesla will offer vehicles for test drives at its stores at the buyer's request, and there will be a small number of cars in inventory for those who want to drive off in their new auto the same day. Price increases will only apply to more expensive Model 3, Model S, and Model X vehicles.

In January CEO Elon Musk announced that it is cutting down 7 percent of its 45,000-strong workforce.

Tesla announced on Sunday that it is reversing course on a plan to close all of its brick and mortar retail locations. Musk did not specify how many stores would close, or how many jobs would be lost as a result. The company did emphasize that all sales would still be online only-salespeople will show customers how to order vehicles via an app.

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Separately, a NY attorney on Monday announced that Tesla's former chief of security has filed a whistleblower complaint with the U.S. Securities and Exchange Commission. The only exception will be the base Model 3, known as the Standard Range, which will keep its $36,200 starting price. Tesla wants to increase its vehicle transportation capacity and cut delivery times. The tweets initiated an investigation into whether Musk sent the tweets to inflate Tesla's stock price. It called for Tesla's general counsel and a newly designated in-house securities law attorney to pre-approve any written statements about Tesla that could be material.

"Shifting all sales online, combined with other ongoing cost efficiencies, will enable us to lower all vehicle prices by about 6% on average, allowing us to achieve the $35,000 Model 3 price point earlier than we expected", Tesla said at the end of February.

Before the announcement, the cheapest Model 3 started at $42,900. The email to employees was also followed by a public-facing blog post.

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