Tesla Changes Strategy: Will Raise Prices And Reduce Store Closures
Apparently, the initial strategy isn’t going to work?
Tesla just announced that during further evaluation of its plan to close many stores, it has come to a new conclusion. The automaker now plans to leave “significantly more stores” open so that it can continue to evaluate the situation. Tesla points out that the stores it previously closed weren’t popular stores in the first place, and would have been closed regardless. It will have to review other stores over many months to determine if closure makes the most sense.
In the meantime, the automaker will increase prices globally by about 3 percent. However, it’s important to note that the $35,000 Standard Tesla Model 3 will remain unaffected. The company says this price increase will only apply to the more expensive variants of its vehicles. This includes the Model S and Model X as well.
In the end, Tesla explains that only closing about half as many stores means about half the overall savings. So, increasing the price on its more expensive vehicles is an attempt to make up the difference. Keep in mind that the plan could change again once the company has further evaluated the situation.
All of this means that interested buyers have until March 18, 2019 to buy a Tesla vehicle at the current prices. After that, the increase will take hold.
Below is Tesla’s full blog post:
Update on Tesla Stores and Pricing
The Tesla Team March 10, 2019
Last month, we announced that we would be winding down many of our stores and moving to online-only sales in order to pass the savings along to our customers.
Over the past two weeks we have been closely evaluating every single Tesla retail location, and we have decided to keep significantly more stores open than previously announced as we continue to evaluate them over 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 would have closed anyway, even if in-store sales made up our entire sales model. A few stores in high visibility locations that were closed due to low throughput will be reopened, but with a smaller Tesla crew. In addition, there are another 20% of locations that are under review, and depending on their effectiveness over the next few months, some will be closed and some will remain open.
As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3% on average worldwide. In other words, we will only 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 current prices are valid until March 18th. There will be no price increase to the $35,000 Model 3. The price increases will only apply to the more expensive variants of Model 3, as well as Model S and X.
To be clear, all sales worldwide will still be done online, in that potential Tesla owners coming in to stores will simply be shown how to order a Tesla on their phone in a few minutes. And the generous return policy of 1000 miles or 7 days, whichever comes first, should alleviate the need for most test drives. However, cars will still be available for test drives at stores at the potential Tesla owner’s request. Stores will also carry a small number of cars in inventory for customers who wish to drive away with a Tesla immediately.