Tesla to raise prices of some vehicles by about 3%

The price increases will only apply to more expensive variants of the brand’s Model 3, as well as Model S and X. There will be no price increase to its US$35,000-priced Model 3.

Tesla Source: Bloomberg

American automotive company Tesla Inc said on Monday it plans to raise the prices of some of its vehicles by around 3% on average globally.

The price increases will only apply to more expensive variants of the brand’s Model 3, as well as Model S and X. There will be no price increase to its US$35,000-priced Model 3.

The move from Tesla comes only days after it said it would be closing down most of its physical stories and move to an online-only enterprise. The firm has however, decided that it will be keeping ‘significantly’ more stores open and will continue to evaluate them 'over the course of several months'.

Tesla had said earlier that the online-only move will require it to reduce headcount in sales and should help cut some operating expenses. However, the surprise decision had stunned investors and analysts as Tesla had only days ago suggested that a brick-and-mortar retail strategy was important in its annual report.

Tesla said potential buyers will have a week’s time to place orders for its Model S and X before prices revise upwards.

Online-only model faces scepticism from observers as Tesla carries on

The automotive industry is long known for having retail showroom operations for potential car buyers to get a look and feel of the car’s interior and design, and take the cars out for a test drive before purchasing these larger ticket items.

Some observers say it is unlikely for other automakers to follow Tesla’s move to an online-only sales as customers are used to seeing and touching a vehicle before buying it.

Former Ford chief executive Mark Fields commented on CNBC: ‘(A car) is the second-biggest purchase that they make in their life, after their house, and will they want to do that just online, not physically seeing or test-driving the vehicle? That’s a leap of faith.’

Online-oriented sales will be a cost-cutting measure that will differentiate Tesla's sales model compared to the usual dealership model that dominates the auto industry. Tesla's chief executive Elon Musk has said that the purchasing of a Tesla car can be done on the phone in one minute, with the comment: 'It’s 2019; people want to buy things online.'

Nasdaq-listed Tesla closed Friday’s session 2.73% higher, at US$284.14. After-hours trading for the stock was flattish, up 0.09% or US$0.26 at 3.10am, New York time on Monday.


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