In A U-Turn, Tesla Raises Car Prices, Backtracks On Stores Closure

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 car prices by 3 percent, except for the $35,000 Model 3.

On February 28, Tesla said that the long-awaited US$35,000 Model 3 was now available, but in order to “remain financially sustainable”, the EV maker was shifting sales worldwide to online sales only, meaning it would be closing down stores.

“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.

On Sunday, the auto maker said that after evaluating the retail stores’ locations, it had decided to “to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months.” As a result of this, “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.”

There will be no price increase for the $35,000 Model 3, Tesla said, but added that the increases would apply to the more expensive variants of Model 3, as well as Model S and X.

“Potential Tesla owners will have a week to place their order before prices rise, so current prices are valid until March 18^th,” the EV maker said, which could add further confusion for potential buyers.

Related: Refining Frenzy Worsens Fuel Glut In Asia

In the first weekend of March, Tesla owners staged protests outside Tesla stores and Superchargers in some parts of Asia after the company had announced the massive price cuts, meaning that existing customers for some models in some counties have paid by up to 40 percent more for their Teslas before the price reduction.

In another Tesla-related development, law firm Grant & Eisenhofer said on Friday that it had filed a suit on behalf of institutional investors against Elon Musk and Tesla’s board “seeking to block Elon Musk from tweeting about Tesla” because “the CEO’s ongoing unchecked misstatements on Twitter have continued to harm the company and its shareholders.”

“The lawsuit, filed in Delaware Court of Chancery, seeks a declaratory judgment and a permanent injunction against Mr. Musk over his unchecked use of Twitter to make inaccurate statements about the company,” Grant & Eisenhofer said.

By Tsvetana Paraskova for Oilprice.com

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