Tesla Drops its Lower-Priced Model S, X Variants, Cuts Price of Model 3 Sedan
Although Tesla built a record number of Model 3's in the past quarter, sales of the Model X and Model S sedan remain relatively flat, as customers opt for the lower-priced, mass-market Model 3 instead.
In order to streamline its pricing strategy and boost sales of its lineup, Tesla CEO Elon Musk announced that the lower priced variants of the Model X and S will be discontinued. Along with the changes, Tesla announced that it is adjusting prices across the board to simply options for customers.
The automaker on Tuesday limited variants of its Model X sport-utility vehicle and Model S sedan to either "Long Range" and the more expensive "Performance". It also trimmed the price of its now entry-level Long Range variants.
Tesla also lowered the starting price of its mass-market Model 3 slightly to $38,990.
The discontinuation of the standard-range variants, however, means a rise in starting prices to $84,990 for the Model X and $79,990 for the Model S, excluding potential buying incentives.
"To make purchasing our vehicles even simpler, we are standardizing our global vehicle lineup and streamlining the number of trim packages offered for Model S, Model X and Model 3," Tesla said in a statement to Reuters.
"We are also adjusting our pricing in order to continue to improve affordability for customers."
Chief Executive Officer Elon Musk tweeted on Tuesday that the price of Tesla's "Navigate on Autopilot" full self-driving option is increasing by around $1,000 on August 16. Currently the option costs an additional $6,000.
As part of the update, Tesla is bundling its high-performance "ludicrous mode" into the price of the top of the line Model S Performance and Model X Performance variants. Ludicrous mode previously cost $20,000 extra.
Earlier this month, Tesla said global deliveries of its three models in the second quarter of this year rose 51% from the previous quarter to a record 95,200 vehicles. The Model 3 accounted for about 80% of the total, which means that Tesla buyers are opting instead for the lowered priced sedan.
Tesla reported combined sales of 17,650 Model S and X vehicles in the second quarter and the company said it expected production and deliveries to continue growing in the third quarter.
In China, the world's largest market for electric vehicles and an critical market for the automaker, Tesla's latest price changes increased the starting price of its Model X to 790,900 yuan ($115,068) and Model S to 776,900 yuan.
Tesla is building a factory in Shanghai where it initially plans to build Model 3 cars to avoid import tariffs in the world's biggest auto market. The company began taking orders last month for those China-made versions, which have a starting price of 328,000 yuan (US$47,700). Tesla aims to have its new Shanghai factory operational by the end of the year.
After the automaker's announcement, Tesla's shares were down 1% at $250.92 in afternoon trading.
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