Tesla Raises Prices as Musk Backtracks on Closing Stores

Elon Musk is backtracking from a jarring change in Tesla’s retailing strategy, keeping many of the company’s stores open and raising the prices of its electric cars as a result, according to Bloomberg.

Tesla will increase the cost of its vehicles by an average of about 3 percent after rethinking a plan announced just 10 days earlier to wind down all but a small number of its stores. In a blog post, the company said about half the locations it was planning to close will stay open.

The blog post doesn’t give a rationale for why Tesla is backpedaling. Musk blindsided many sales personnel at the company with the store closings, and some investors and analysts feared the cost-cutting measures sent troubling signals about the state of the company’s sales and cash position.

In its blog post, Tesla said it’s sticking to plans for all sales to be done online, with more thinly staffed stores playing the role of coaching consumers on how to order cars on their phones. The retail locations also will carry inventory of vehicles for test drives and for immediate purchases.

Musk, 47, described the store wind-down announced on Feb. 28 as a cost-cutting move that enabled Tesla to offer a long-promised $35,000 version of the Model 3 sedan, the automaker’s first mass-market vehicle. The company will continue to offer the car at that price point and will increase the cost of other variants of the sedan. The Model S and Model X also will be made more expensive, and buyers will have a week to place orders before prices rise.