Earlier this week, electric vehicle (EV) company Tesla announced that it’s changing prices across its product line. The corporation also announced that it would be discontinuing the Standard Range editions of its Model S and X cars.
To begin, Tesla cut the price of the Standard Range Plus edition of its popular Model 3 sedan from $39,500 to $38,990. The company also reduced the cost of the Long Range Model 3 from $49,500 to $47,990 and the Performance edition from $59,500 to $54,990.
The auto manufacturer cut the price on the Long Range Model S from $85,000 to $79,990. The now-discontinued Standard Range Model S previously sold for $75,000. Furthermore, Tesla increased the cost of the Performance Model S; the car will retail for $99,990, up from $96,000.
Finally, the EV maker is raising the price on the base edition Model X from $81,000 to $84,990. But, in exchange for the price bump, the firm has made the rapid acceleration “Ludicrous Mode” upgrade a standard feature on its luxury vehicles. In the past, Tesla sold “Ludicrous Mode” as a $20,000 perk.
The company is also reducing the cost of the Model 3 in Europe and China. However, the sedan will remain more affordable in the U.S. than it is abroad.
As mentioned earlier this year, cost of the Tesla FSD option will increase every few months. Those who buy it earlier will see the benefit.
— Elon Musk (@elonmusk) July 16, 2019
On Tuesday, Tesla CEO Elon Musk announced via Twitter that the company would be raising the price for the “Full Self-Driving” Mode version of Autopilot by around $1,000 in August. It should be noted that despite the feature’s name, no available iteration of Autopilot is capable of autonomous operation.
Reason for the Changes
In a press statement, Tesla explained that it revised its pricing and offerings to standardize its lineup and to make its products easier to purchase. In reality, the EV maker’s motives are more complex.
For one thing, beginning in July, the company’s products became more expensive for the American public. Previously, the federal government subsidized the purchase of Tesla’s EVs with a $7,500 tax credit. But due to the company’s success, Washington reduced its available incentive to $3,750 in January. As of July 1, U.S. consumers can only claim a $1,875 credit after buying a Model 3, S, or X.
Industry analysts believe that Tesla made its cars cheaper to compensate for the lost government discount. Another factor is that the auto manufacturer is in a cost-cutting phase right now. In May, Musk told his staff that the firm would need to significantly reduce its overhead because the $2.7 billion he raised could only keep the company open for 10 months.
Tesla is being atypically sensible by eliminating variants on its underperforming luxury line and making its best-selling car more affordable. Furthermore, the company picked a good time to bolster its consumer outreach efforts. Last month, the firm revealed that it broke its previous sales record by selling 95,200 cars in Q2 2019. If the company can approach or better that number in the third quarter, it’ll be on the road to profitability.
That said, Tesla should probably cool it with the abrupt price changes for the rest of this year.
Bloomberg notes that the firm has adjusted pricing on its products eight times this year. As a result, the company has aggravated some of its consumers. The publication spoke to one man who attempted to return his Performance Model 3 after learning he could’ve saved $6,410 by buying the car now instead of last month.