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Tesla walks back its plan to close showrooms

Tesla walks back its plan to close showrooms

March 12th, 2019 in Business

FILE- In this July 6, 2018, file photo prospective customers confer with sales associates as a Model 3 sits on display in a Tesla showroom in the Cherry Creek Mall in Denver. Tesla is walking back its plan to close most retail stores worldwide in a move the company says will force it to raise prices on most of its electric vehicles. The company still will move to online-only sales, but now says it won't close as many stores as originally thought. Tesla announced last month that it would shutter most of its stores to cut costs so it could sell its lower-priced Model 3 for $35,000. (AP Photo/David Zalubowski, File)

DETROIT (AP) — Tesla is walking back plans to close most of its showrooms worldwide and announced price hikes for most of its electric vehicles.

Tesla announced last month that it would shutter most of its stores to cut costs so it could sell its lower-priced Model 3 for $35,000. The company continues its shift toward online-only sales, but now says it won’t close as many stores as originally thought.

The $35,000 base Model 3 will still be available, but the company is raising prices by 3 percent on all other models.

In a Monday filing with government regulators, Tesla now says it closed 10 percent of its stores, but a few of those will now remain open. Another 20 percent are being evaluated and some could remain open.

The company gave no numbers, but said it would close only about half the stores that it had intended to. It has 378 stores and service centers worldwide and about 100 stores in the U.S. If the company closes 30 percent of the stores that would equal about 110.

“As a result of keeping significantly more stores open, Tesla will need to raise vehicle prices by about 3 percent on average worldwide,” a company statement said. “We will only close about half as many stores, but the cost savings are therefore only about half.”

Remaining stores could have fewer workers but will have vehicles available for test drives and a small inventory in case people want to buy immediately, the statement said.

Also Monday, a New York attorney announced Tesla’s former chief of security has filed a whistleblower complaint with the U.S. Securities and Exchange Commission. Attorney Andrew Meissner said in a statement Sean Gouthro provided information about Musk’s Aug. 7 tweet that he had the financing to take the company private at $420 per share. As it turned out, Musk didn’t have the funding secured. The SEC filed a securities fraud complaint, and Musk and Tesla agreed to each pay $20 million and to governance changes including a Twitter monitor for Musk.

The SEC submission says the go-private plan was discussed internally at Tesla many days before Musk’s tweet “and that many were suspect of the purported deal’s legitimacy,” Meissner’s statement said.

Tesla also announced Monday that it has purchased car-hauling trucks and trailers from a California company in a stock deal worth about $14.2 million. Tesla paid for the purchase with about 50,000 previously authorized shares. Tesla wants to increase its vehicle transportation capacity and cut delivery times.