Tesla turnaround: some retail stores will stay open, prices will increase

Tesla can’t quite seem to make up its mind about its retail sites (or “galleries, showcases and Tesla information centers” if you prefer). Two weeks ago, the company announced plans to close most of its stores “in order to pass the savings along to our customers.” Now this decision seems to have been partially reversed.

“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,” said Tesla in a blog post. “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.”

Tesla continues to make a direct link between the expense of running the stores and the prices of its vehicles: “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.”

The stock market didn’t care for the news about the store closings, but it didn’t dig the waffling either – after recovering from the first announcement, TSLA shares stumbled the morning after the second. Morgan Stanley lamented what it called “an air pocket in demand that is coming earlier than we expected,” as Bloomberg reported. “For what many investors believe to be a high growth tech firm, TSLA has made notable moves to cut costs/prices & stimulate orders,” wrote the investment firm.

 

Source: Tesla, Bloomberg

  • dogphlap dogphlap

    I have no stock in TSLA. The original changes were too drastic for me so I’m glad to see them rolled back to 50% of the original proposal but it would have been better all round if Tesla had gone to the second solution in the first place.
    The company looks to be in fine shape, I wish Tesla and its employees at all levels the very best.