Tesla Cuts Entry-level Model S and X in ‘Streamlining’ Effort

Following up a record-breaking quarter for deliveries, Tesla is making changes to the models it offers and adjusting pricing to reflect the new lineup. It’s good news if you were looking for a high-end Model S or X, but if you were looking at the base model, you’re in trouble. 

According to Automotive News, Tesla has cut their Model S and X variants that aren’t the “Long Range” or “Performance Models.” These are the most expensive units with the highest profit margin, but possibly also the slowest sellers in the range. In a statement, Tesla said, “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.”

The new pricing on the Model X is $84,990 and $79,990 for the Model S. Tesla also lowered the Model 3 price to $38,990. That is, of course, before any incentives.

If this really sounds like a price increase to you, you’d be right. While cutting prices on the top tier models will ease the pain a bit, cutting the less-expensive models forces buyers into the higher trims by default. Perhaps Tesla just assumes that buyers will shell out more if they have to?

You could look at this move a couple of different ways. Streamlining production can save costs, which Tesla is always looking to do. But raising the prices also is a move that could be used to raise profits, and not just killing slow-selling versions. Depending on whether you’re an optimist or a pessimist, your opinion may vary.

What is clear is that Tesla is focused primarily on the Model 3. Elon Musk has already said there’s no refresh of the Model S or X coming, so these models get incremental updates but won’t get any major updates to prevent it from aging on the vine.

It’ll probably take at least a quarter to see if these changes had an effect on Tesla’s bottom line, however. So we’ll have to be patient to see if it worked.


[Image: Tesla Motors]

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