Tesla Lowers Price of the Model X

Author: Eric Walz   

Tesla lowered the base price of its Model X crossover to $79,500, stating improving margins were behind the move, which came as the automaker is ramping up production of its new lower-priced Model 3.

Some analysts have been concerned that the launch of the Model 3, which has a base price of $35,000, would steer some potential buyers away from the Model X to that lower-priced sedan.

However, CEO Elon Musk said earlier this week that the Model X's demand had not waned.

"When we launched Model X 75D, it had a low gross margin. As we've achieved efficiencies, we are able to lower the price and pass along more value to our customers," Tesla in a statement on Friday announcing it had lowered the vehicle's price by $3,000.

The Model X has various configuration options, which increase the cost significantly more than the base price of $79,500. For example, the most expensive version of the Model X, the P100D, with fastest acceleration and longer range, costs $145,000.

Musk said on a call with analysts earlier this week that the launch of the Model 3 had not cannibalized Model X sales, and that demand for the Model X as well as the Model S had actually increased with the release of the lower-priced vehicle.

The Model 3, marketed as a car for the masses, begins at $35,000 before incentives, but a longer-range version is priced at $44,000, to compete with high volume luxury sedans such as the Audi A4, BMW 3 series and Mercedes C class.

Tesla does not break out gross margins of its individual models, but overall gross margins excluding stock-based compensation and revenue from zero-emission vehicle credits fell to 25 percent in the second quarter from 26.4 percent a year earlier, due to the Model 3 build.

Eric Walz
Originally from New Jersey, Eric is an automotive and technology reporter specializing in the high-tech industry in Silicon Valley. Eric has over fifteen years of automotive experience and a B.A. in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the automotive industry and beyond. He has worked on self-driving cars and as a technical writer, helping people to understand and work with technology. Outside of work, Eric likes to travel to new places, play guitar, and explore the outdoors.
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