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Tesla Closing Its Stores
March 12 2019 -Tesla Reverses Plans To Close Stores, Will Raise Prices Instead By Investors Business Daily
Tesla stock moved up Monday after the electric car maker disclosed plans late Sunday to keep some of its U.S. stores open, opting instead to raise prices on its high-end vehicles by about 3%.
In late February, Tesla (TSLA) said it planned to close most of its stores and move to an online-only sales platform. Those designs were part of a cost-cutting measure that included layoffs.
The announcement came at the same time Tesla unveiled its long-awaited version of the Model 3 for $35,000. Subsequently, Tesla stock fell 18% over the next three days.
In a blog post by Tesla Sunday evening, the company said it now wants to close about half as many stores than initially planned.
"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," the company said. As a result, Tesla said it needs to raise vehicle prices by about 3% on average worldwide.
Tesla Stock Inches Up Tesla stock climbed 2.4% to close at 290.92 on the stock market today.
Price increases only apply to the more expensive variants of Model 3. Model S and X prices also increase, the company said. There is no price increase planned for the base $35,000 Model 3.
Currently, the Model S and Model X have a starting price of $79,000 and $88,000 before savings, respectively.
Potential Tesla owners have a week to place their order before prices rise. Current prices are valid until March 18.
Cars Still Sold Online
Tesla still plans to sell all its cars online. Potential Tesla owners that come to the remaining stores still get to test drive the all-electric vehicles. They'll also get instructions on how to order them online
"While the reversal to keep stores open does call into question the soundness of the initial decision, we view this as the right course of action and think that test drives are still an important part of the sales process until the electric vehicle penetration rates increase meaningfully," Canaccord Genuity analyst Jed Dorsheimer wrote in a note to clients.
He maintained a buy rating on Tesla stock and a price target of $450.
Chief Executive Elon Musk previously said he does not expect the company to turn a profit in the first quarter.
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