Tesla Decides Against Lowering Prices to Keep More Stores

There has been a new development on Tesla’s sales strategy. The electric vehicle (EV) maker announced on Mar. 10 to “raise vehicle prices by about 3 percent on average worldwide” to “keep significantly more stores open than previously announced.”

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Tesla said last month that they would close down many of the stores and launch the “online-only strategy” to pass on the savings to customers through price cuts. The new strategy would mean massive store closures, retail headcount reduction, and possibly a pay cut for retail employees.

Less than two weeks later, the electric automaker decided to pull back from the plan. It will leave more stores open and raise back prices to cover the drop in cost savings.

The change of the plan, however, doesn’t mean that Tesla will move away from its online sales strategy. All global sales will still be done online, and physical stores are there to show customers how to order a vehicle on their phones.

Of course, the stores also give customers an opportunity to test drive the cars before purchasing. And a small number of cars in inventory will be available for direct pickup.

The decision to adjust the strategy came after close evaluation on every single Tesla retail location over the past two weeks. The survivals will continue to be assessed over several months. Ten percent of stores were closed because they couldn’t attract natural foot traffic.

According to Tesla, potential Tesla owners will have one week to place an order before the price raise takes effect on Mar. 18. Even after the raise, the basic Model 3 will still sell for $35,000, a price which CEO Elon Musk said was extremely difficult to make. The price adjustment will apply to more expensive versions of Model 3, as well as Model S and X.