Tesla reverses decision to cut store numbers

Having previously announced that it would begin selling its vehicles solely online to reduce prices, Tesla has now confirmed that it will keep some of its physical stores open

Elon Musk is currently facing a lawsuit from Tesla's shareholders for allegedly tweeting “repeated misstatements”. In February, he claimed Tesla would manufacture 500,000 cars in 2019, despite official figures signalling a far lower production rate

Tesla has reneged on its decision to close its physical stores, as the company looks for new ways to keep the price of its Model 3 vehicle down. On March 11, 10 days after the firm’s initial announcement, Tesla confirmed that it would only close half as many stores as initially planned. Meanwhile, car prices across the fleet will rise by three percent, though Tesla has vowed the increase will not apply to its ‘affordable’ Model 3, which is currently priced at $35,000.

On March 1, the California-based business announced it would close a number of its brick-and-mortar stores and transition to online sales in order to offset the lower price it was offering for its Model 3.

While it is unknown which stores will shut, Tesla has said certain showrooms in high-visibility locations will now reopen, albeit with fewer staff

Now, the Model S, Model X and the more expensive variants of the Model 3 will all increase in price as of March 18, contrary to the six percent reduction the company pledged last month. Tesla CEO Elon Musk has previously declared that his firm’s cars are “too expensive for most people”.

While it is unknown which stores will shut, Tesla has said certain showrooms in high-visibility locations will now reopen, albeit with fewer staff. Currently, the firm has 378 stores worldwide.

“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,” read a Tesla statement.

“As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about three percent on average worldwide. There will be no price increase to the $35,000 Model 3.”

Musk is currently facing a lawsuit from Tesla shareholders for tweeting what they allege to be “repeated misstatements”. In February, he claimed that Tesla would manufacture 500,000 cars in 2019, despite official figures signalling a significantly lower production rate – a statement that “hurt” investors.

Tesla faced a challenging 2018, forcing the company to cut its 45,000-strong workforce by 3,000. Musk himself has faced questions over his erratic behaviour, having recently been forced to step down as Tesla chairman to settle fraud charges. The latest U-turn by Musk is unlikely to inspire confidence in his ability to take the company forward.