Why is Tesla raising the price of its Model 3, Model S and Model X?

Tesla is set to increase the prices of its range-topping electric cars after ditching cost-cutting plans to close its entire showroom network.

The electric carmaker revealed in a blogpost on Sunday that vehicle prices would rise by “about 3%” worldwide on 18 March, leaving prospective buyers with “a week to place their order” before the hikes kick in.

The price increases will apply to the range-topping Tesla Model 3s, along with the more expensive Model S saloon and Model X SUV, the company said. Only the entry-level Model 3 will retain its $35,000 (£26,970) price tag.

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Tesla claims it needs to charge more in order to keep its showrooms open - marking a U-turn on plans announced less than two weeks ago to close all of the company’s retail sites, with sales online only, the BBC reports.

The EV giant previously claimed that axing its showroom network, comprising 378 stores and service locations, would allow the firm to cut prices by about 6% on average.

But Tesla will now close only 10% of its network, with a further 20% under review, The Verge reports.

“A few previously closed stores will be reopened, but with fewer workers,” according to the Tesla blogpost.

However, the company is still planning to conduct its sales online only, with buyers in stores shown how to order a Tesla on their phone, a process that takes “a few minutes”, the statement said.

Cars will still be available for customers to try out at stores, but Tesla claims its “generous” returns policy of 1,000 miles or seven days, depending on which comes first, should “alleviate the need for most test drives”.