Tesla to raise prices after March 18

Tesla will raise prices and backtrack on closing most of its stores

Tesla still plans to sell the most basic version of the Model 3 for $35,000 even though the auto is "excruciatingly difficult" to make at that price, according to CEO Elon Musk.

Since New Year's, Tesla has announced three rounds of price cuts on all its models, including $2,000 in January, $1,100 in February, and $8,000 to $13,000 March 4.

The recently unveiled $35,000 Model 3 - Tesla's cheapest vehicle yet - will not be affected by the price hike.

Tesla did not immediately respond to a request for further information, including which specific stores would be reopening.

In its blog post announcing the change, Tesla said that, "we have chose to keep significantly more stores open than previously announced as we continue to evaluate them over the course of several months".

The company noted that it already shuttered 10 percent of sales locations that weren't generating sufficient foot traffic, and those will remain closed.

"We will be closing some stores, and there will be a reduction in headcount..." It added that the future of another 20% of locations will be under review in the next few months.

The blog post doesn't give a rationale for why Tesla is backpedaling. Most of Tesla's leases didn't have cancellation clauses, either, leaving the company exposed to potential lawsuits.

The move comes days after Tesla's announcement to sell cars on an online-only platform to help save costs. The 7-day/1,000 mile test drive policy will still apply as well, though test drives will still be available in stores.

Other than that, Tesla is not giving much away: accompanying the invitation is a high contrast image of the front profile of the electric SUV, which appears (rightly so) to have a higher roof than the Model 3. Announcing a radical change to your business model only to then reverse course is embarrassing.

What is clear is that Tesla sales in 2019 have been disastrous. The company has announced that while it will be reducing staff in some locations, it will only shutter about half as many outlets as previously announced. Sales of the Toyota Prius Prime and Honda Clarity PHEV, for example, are down roughly 55 percent from December 2018.

Barclays analyst Brian Johnson said it would also be hard to achieve the cost savings needed to lower the price of the Model 3 through store closures alone. He later had to correct the language of the tweet, to say by the end of the year the annualized production rate would probably hit 500,000, with 400,000 deliveries.

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