Tesla u-turn on store closures

Tesla has engaged reverse on earlier plans to close its retail stores but will raise some vehicle prices an average 3% world-wide to compensate.

The company announced in February it would axe many retail stores and move to online-only sales, that and other cost efficiencies enabling a lowering of vehicle prices by about 6% on average.

The “Tesla team” says it’s now decided to keep “significantly more stores open than previously announced” as store evaluations continue over several months.

That move is likely to see New Zealand’s sole Auckland store and Australia’s five stores remain, through whether any changes would be made to them is unclear at this stage.

“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,” the Tesla team says.

“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.”

The team says while about half as many stores will close as planned, cost savings are therefore only about half as well.

Price increases will apply from March 18 to more expensive variants of the Model 3 (the base priced US$35,000 Model 3 has no price increase) as well as the Model S and X.

All sales worldwide will still be done online, with potential Tesla owners coming in to stores shown how to order a Tesla on their phone in a few minutes.

Tesla’s return policy of 1609km (1000 miles) or seven days, whichever comes first, should alleviate the need for most test drives, it says. However, cars will still be available for test drives at stores at the potential Tesla owner’s request. Stores will also carry a small number of cars in inventory for customers who wish to drive away with one.

Meanwhile, Tesla will unveil its Model Y on March 14 in Los Angeles, with production likely to start in 2020.