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Tesla will raise prices after backtracking on store closures



The electric car manufacturer said in a statement late on Sunday that the prices of most models around the world would increase by about 3% after it decided to "keep significant more stores open than previously announced."

Tesla ( TSLA ) had said less than two weeks ago that it would start closing most stores in a cost-saving motion designed to reduce the price of his best-selling vehicle, model 3, to as little as $ 35,000.

As part of the plan, customers will instead have to buy Tesla cars online or by telephone rather than personally at one of their hundreds of stores.

Tesla is still planning to sell the most basic version of model 3 for $ 35,000, although the car is "scary" to do for that price, according to CEO Elon Musk.

The 3% price increases announced on Sunday will apply to the more expensive versions of model 3, as well as the model S sedan and Model X crossover. The higher prices will come into force on 1

8 March.

Tesla has 378 stores and service centers worldwide. The company did not decide on Sunday how many of these were still planned to close or in which markets. It said that it will now "close about half as many stores" as previously planned. Some of the stores that are already closed will be reopened with fewer employees.

Tesla did not give cause for the U-turn than to say that it followed an evaluation of two weeks by all of its retail stores. The company added that it will "continue to evaluate" its network market over the next few months.

"Depending on the efficiency over the next few months, some will be shut down and some will remain open," said the statement.

Tesla is still sticking to its plan for all orders for the vehicles to happen online – even in bricks and mortar outlets.

  5 takeaways from Tesla Model 3 announcement

"Potential Tesla owners come into the stores show how to order a Tesla on the phone in a few minutes, the company said. Stores will also have cars available for test runs and "a small number of cars in stock for customers who want to drive away a Tesla right away," it added.

Tesla's announcement of the original plan to close the stores led to a sale of the company's share. Some analysts said it could make it more difficult for Tesla to compete with car manufacturers who still use brick and mortar dealers to sell cars.

Barclays analyst Brian Johnson said it would also be difficult to achieve the cost savings needed to lower the model 3 price through the store doors alone.

Musk has promised a price of $ 35,000 for model 3 since the car was first unveiled in 2016.

The company has already lowered the prices of Model 3 several times. In February, it said it would release 7% of the workforce to cut costs.


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