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March 12, 2019

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Tesla hikes prices, keeps stores

Electric carmaker Tesla Inc has backed off its plan to close all of its US stores and instead will raise prices of its high-end vehicles by an average 3 percent as it strives for profitability.

The company said late Sunday that it would now close only about half as many stores than initially planned in a widely criticized move this month to cut overheads and shift its whole distribution network online.

“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,” the company said.

“As a result Tesla will need to raise vehicle prices by about 3 percent on average worldwide.”

Separately, Chief Executive Officer Elon Musk was yesterday due to explain why he should not be held in contempt for recent tweets that US securities regulators say violated a September fraud settlement.

The case is the latest major challenge by authorities to Musk’s leadership as Tesla seeks to make good on his promises to Wall Street that it will soon be consistently profitable and will not need more capital.

The 3 percent increase on its top-end cars would be the first hike in prices after a series of cuts over the past year aimed at offsetting a reduction in green tax credits and the impact of rising tariffs overseas.

Tesla said the worldwide price increases would apply to the more expensive versions of the Model 3, Model S and Model X, and that there will be no price increase to the US$35,000 Model 3.

“The 3 percent price increase announcement still indicates ... strong demand,” said Ivan Feinseth, an analyst with Tigress Financial Partners.

Tesla said potential buyers can place orders until next Monday at current prices: US$79,000 for the Model S and US$88,000 for the Model X.

Separately, Bloomberg reported Tesla is in talks with Chinese battery maker Contemporary Amperex Technology Co Ltd for the production of rechargeable batteries for the Model 3.


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