Tesla never says anything: it raises prices and keeps most stores

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Just days after announcing the closure of most of his stores, Tesla made a sharp U-turn.

In a message posted on his blog shortly before midnight Sunday, the electric car maker said it had decided to keep many sites closed or about to be. And he said that he would increase most of his vehicle prices by about 3% in the world, just weeks after the price cut.

"In the past two weeks, we have been closely evaluating each Tesla retail site and we have decided to leave many more open stores than previously advertised, while we continue to evaluate them for several months," he said. society in his blog. to post. The price increases, he said, are necessary to offset the expected loss of savings following the closure of the stores.

The flip flops are the last sign of turbulence around the company and its managing director, Elon Musk.

"This reversal is bizarre and indicates a lack of planning in the first announcement," said Mike Ramsey, an analyst at Gartner. "Their stores always meet a real need."

Until last month, Tesla was eager to expand its network of showrooms and malls galleries, which featured its cars but took no customer orders.

On February 28, Musk told reporters at a teleconference that Tesla would begin offering a long-awaited version of its Model 3 sedan at a starting price of $ 35,000. Previously, the cheapest model 3 cost $ 43,000 before tax incentives.

Musk said shutting down his stores would allow Tesla to cut costs enough to make model 3 profitable at a lower price. But he would not explain these calculations, and he said Tesla would lose money in the first quarter, contrary to previous forecasts.

As part of the cost reduction, Tesla would now only take orders online. Tesla asserted the online approach in its announcement Sunday night, saying its stores would be a way to introduce potential buyers to its vehicles, perform a test drive on demand – a reversal of its previous announcement – and show how to make a purchase.

"The stores will also have a small number of cars in inventory for customers who want to leave immediately with a Tesla," he added.

In a recent email to employees, Musk said 78 percent of Model 3 orders had already been placed online. Buyers can get a full refund when they return the cars within seven days and drive them to less than 1,000 miles.

Tesla has been down for the past few months, seeking to boost investor confidence. In addition to the layoffs of 7% of its workforce in January, news about store closures appeared to highlight the challenges a newcomer faces in an old-fashioned manufacturing industry. The company struggled to make a few thousand cars in a week – a feat that established automakers can accomplish in a day.

Asked about the latest decisions of the company, a spokesman for Tesla declined to comment.

The weeks of tension weighed on Tesla's shares. On Monday, they rose 2.4%, closing at $ 290.92, but they are down 9% since Musk said the company would not be profitable in the first quarter.

The twists and turns on the marketing front coincided with the resurgence of the upheavals surrounding Mr Musk himself.

Less than a month ago, Tesla's general counsel resigned one day after Musk said on Twitter that the company was planning to sell 500,000 cars this year, an increase of 100,000 by report to the estimate made public in January.

The Securities and Exchange Commission said the tweet was against an agreement reached in September with Tesla to settle a securities fraud case, and asked a federal court to condemn Mr Musk in contempt. The regulation required the company to "put in place additional controls and procedures" to oversee Mr. Musk's communications.

In a response filed in court on Monday, Mr. Musk's lawyers argued that there was no reason to claim contempt. They stated that the Tesla leader had "correctly used his discretion" to determine that nothing in his Twitter posting was important and that "without a fair reading of the materiality standard", the publication does not include the following: had it altered the information made available to investors.

The response also indicated that a contempt citation would "pose serious First Amendment problems" and that the request by the SCE represented "an unprecedented overbreadth".

Despite its financial and regulatory challenges, the company is advancing new initiatives.

On Thursday, Musk is expected to unveil the Y model, a sport utility vehicle Tesla relies on for continued growth. David Whiston, a Morningstar analyst, said the big question for Tesla's business outlook was when the Y model would be available for sale. "Thursday is just for the show," he said.

And in an effort to solve its logistical problems related to the delivery of cars to customers, said Tesla in a document filed with the SEC Monday, she had purchased tow trucks and trailers to a California company in exchange for stockpile worth $ 13.8 million. In November, Mr. Musk says on Twitter Tesla had bought "some trucking companies", but did not provide any details.

Musk described Model 3 as a crucial public offering for Tesla's future. In the last three months of 2018, Tesla has opened 27 sales and service outlets to meet growing demand. Overall, the company had more than 100 stores and showrooms in the United States and others abroad.

In its announcement Sunday night, Tesla said it has already closed 10% of its sites. These stores were not "naturally cluttered," he adds, but some will reopen with smaller staff. The company said an additional 20% was under review for a possible closure in the coming months.

The automaker also said the $ 35,000 version of Model 3 would not be affected by the price increases. They will apply to the high-end Model X and Model S – cars Tesla has only recently discounted – and the more expensive versions of Model 3.

The company said customers would have a week to place orders at current prices.