Electric carmaker Tesla has performed a U-turn on proposed store closures by announcing it will raise prices of its high-end vehicles by around three per cent on average in an effort to retain more dealerships around the world.
The carmaker is continuing with its plan to expand its online sales.
The abrupt move earlier this month by CEO Elon Musk, contrasting with an expanding network of retail spaces, sparked concern about Tesla's finances.
Chief Executive Elon Musk said late last month that Tesla would close most of its retail locations as it transitions to an online-only ordering platform, slashing a large portion of its sales staff in the process. When we recently closed 10 percent of sales locations, we selected stores that didn't invite the natural foot traffic our stores have always been designed for.
With that increase, the base price of the Mid Range Model 3 would rise $1,200 to $42,400 (all prices assuming the mandatory $1,200 destination and documents fee remains the same), for example, and the Long Range Dual Motor all-wheel drive Model 3 would rise from $48,200 to $49,610.More news: Naomi Osaka gets revenge against Kristina Mladenovic at Indian Wells
Tesla is clearly iterating wildly as it attempts to find the balance of retail store spending and non-value-add overhead on a vehicle purchase, but these wild shifts in employee placement strategies leave their own employees, both former and current, up in the air.
Tesla announced some stores closed in high visibility locations will be reopened with a fewer number of staffers. Tesla has stated that only the most expensive variants of the Model 3, S and X will be impacted.
In a separate issue, Musk must argue his case to the Securities and Exchange Commission (SEC) why he should not be held in contempt over past tweets announcing he planned to take the company private at $420 a share and had the funding to do it, Reuters reported.
Tesla is an electric auto and energy company based in Palo Alto, California, that is worth about $49 billion. Tesla hasn't announced how many stores will remain open, but the company says it will be reopening "high visibility locations that were closed due to low throughput", along with a handful of other stores that are now being evaluated for effectiveness.
The price hikes will go into effect in a week, giving potential buyers a chance to place orders before that happens.
He said the sooner-than-expected arrival of a US$35,000 Model 3 likely reflected the need to replenish cash after paying off a US$920 million convertible bond and added that weak USA sales early this year also probably hasn't helped. Tesla wants to increase its vehicle transportation capacity and cut delivery times.