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article imageTesla raises prices and walks back plan to close most showrooms

By Karen Graham     Mar 11, 2019 in Business
Tesla is backtracking on its plans to close its showrooms. Additionally, Tesla will raise the price of its vehicles, with the exception of the Basic Model 3 sedan.
After Tesla CEO Elon Musk's March 1 announcement of literally dozens of changes, not only in production (again) but in the company's business model, investors were left scratching their heads, wondering what had just happened.
Not only did Musk announce a drop in the prices of all Tesla models, but he announced most of the Tesla showrooms would be closed. Some "galleries" will remain open in key market areas, he said, and Tesla will be increasing the number of service centers and staff worldwide.
But late Sunday night, Musk told employees in an email that the company would shift its sales plans yet again — raising prices by about 3 percent on most of its cars and keeping more stores open than it had previously planned.
The $35,000 base Model 3 will still be available. In a company filing with government regulators on Monday, Tesla says it closed 10 percent of its stores, but a few of those will now remain open. Another 20 percent are being evaluated, so more could be closed.
"As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3 percent on average worldwide," a company's statement said, reports CTV News. "We will only close about half as many stores, but the cost savings are therefore only about half."
The key for Tesla is producing an entry-level car in the mid-$30 000 range  which would put it in di...
The key for Tesla is producing an entry-level car in the mid-$30,000 range, which would put it in direct competition with major automakers.
Tesla
Tesla is sticking to its plan to embrace e-commerce, with all orders for its vehicles to take place online, even those taken in brick-and-mortar showrooms.
"Potential Tesla owners coming into stores will simply be shown how to order a Tesla on their phone in a few minutes," the company said. Stores will also have cars available for test drives and "a small number of cars in inventory for customers who wish to drive away with a Tesla immediately," it added.
Gartner analyst Michael Ramsey called the move "startling" and said it undermines the credibility of Musk and Tesla's management. "How else can you view it except to see it as a remarkable example of lack of foresight or planning?" Ramsey asked. "It's almost as if the decision was announced and made without any analysis of what the outcome would be."
Ramsey is probably correct in his analysis. As Digital Journal reported on Saturday, the Wall Street Journal said Tesla's plan to shut down many of its stores may expose the company to new headaches to go along with the ones it already is dealing with. Ramsey questioned the showroom closings for the same reason.
Tesla also announced on Monday it had purchased car-hauling trucks and trailers from a California company in a stock deal worth about $14.2 million. This is part of the company's plan to increase transportation efficiency and cut delivery times.
More about Tesla, raising prices, showrooms, Model 3, Job cuts
 
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