By on January 10, 2019

There will be no Ace of Base prizes for the Tesla Model X or Model S in 2019. Just days after promising to cut prices of all its cars by $2,000 in response to the company blowing through its federal tax credits faster than a record producer with a bag of high-test cocaine, the company’s Chief Executive Tweeter has announced the discontinuation of the 75D X and S models.

This is in addition to Tesla cleaving off a number of color and interior trim choices last year. At the time, it was speculated the company was doing so in an effort to streamline production.

So Elon giveth, so Elon taketh away.

The doomed 75kWh versions of the big sedan and crossover come with a battery that permits a range of 259 miles for the Model S and 237 miles for the Model X. As of this writing, Tesla lists those machines for prices of $76,000 and $82,000, respectively, before any available incentives and curiously calculated “gas savings.”

A maxed-out, check-all-the-boxes Model 3 lists for $70,500 before any estimated savings, if you’re wondering.

It’s a not insignificant $18,000 walk up the food chain to a 100kWh Model S from the 75, while the next most expensive Model X is $15,000 adrift from the base trim that’s being shelved. With this pricing structure, might potential Tesla buyers be willing to downgrade to a Model 3? Or will they simply make a beeline for the nearest Jag showroom to check out the I-Pace?

For its part, Wall Street was less than impressed with the largesse shown by Musk with the $2,000 haircuts on all models, responding by saying it’ll eat into the company’s profits and stoking fears that demand for Tesla cars has waned.

Tesla delivered just over 90,000 cars in Q4 of 2018, a new record for the company. That figure included about 63,000 Model 3 sedans. Total production was slightly lower at 86,555 vehicles, with the discrepancy driven by a large number of Model 3s that were seemingly in transit to customers. Recall that Musk tweeted his company was “building our own car carriers” back in September. Leave your thoughts about that tweet in the comments.

Hacking away at the total number of configurations in which customers can buy a Model X or S may be a way in which Tesla can streamline production and put a lid on costs. Late last year, the company binned several interior color and trim combinations. Full leather interiors vanished ages ago (allegedly to satisfy vegan shareholders – I can’t believe I just typed that phrase).

If you’re on the fence about getting a 75kWh Model S or Model X, you have until Sunday night to pull the trigger.

[Image: Tesla]

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14 Comments on “Carrot & Stick: Days After Cutting Prices, Tesla Chops Base Models...”

  • avatar
    healthy skeptic

    I’d rather have a fully loaded Model 3. I’m guessing they did this in part to better differentiate their model lines.

  • avatar

    Peak Tesla, anyone?

    • 0 avatar

      Peak Model X, Tesla’s range-topping CUV.

      Tesla will happily sell you a Model 3 (sedan) or a Model S (sedan) for less. And, in a year or three, they will sell you a Model Y (CUV) for less — or maybe even a pickup truck.

      Confusing Tesla models is understandable, because they’re doing that thing where they use letters and numbers for the model, in order to draw your attention to the brand name. It’s a brand-building thing.

  • avatar

    Seeing a lot of comments about major insurance rate increases on Teslas as the companies get more field experience. In addition to car carriers and body shops, Musk needs to start his own car insurance plan.

  • avatar

    Interesting that Avis seems to have a decent sized fleet of Model X rentals in Norway – as least I’ve seen several with prominent Avis stickers around the Oslo area recently. Isn’t selling to rental companies usually a sign of waning consumer demand?

  • avatar

    You really have to expect demand to slide at some point. Tesla has sucked up a large portion of the very small “premium” auto market. There just aren’t that many of those buyers in that field, and even fewer in the “electric premium” niche.

    That point is illustrated by the fact that you can currently buy a Model 3 if you so desire and have it in about 2 weeks, even though hundreds of thousands of reservation holders still exist. They aren’t exercising their option to buy because the Model 3 is “premium” expensive, and all those hundreds of thousands of reservation holders are not “premium” buyers as it were.

    Many of the Model 3 sales are coming from those who already own an S or an X, or were planning on buying a Tesla but wanted the smaller Model 3 over the quite large Model S.

    My guess is they will ride the Model 3 gravy train until sales start to slide, and that will force them to start offering the “base” $35k model. They might go back to losing money at that point though. This year will be a white knuckle ride for holders of TSLA.

    • 0 avatar

      In 2017 and early 2018 it was true that many S and X buyers were buying the 3, but now the vast majority of buyers are new to the brand. Also 3/4 of buyers the last few months did not have a reservation. As of the end of quarter, Tesla had 3 days worth of inventory where the industry average is around 70 days.

      They are currently in production for cars that go to Europe and China. First deliveries in Europe planned for February at 3,000 per week. I imagine it would take several more months at that rate to fulfill demand. So I expect standard range $35k Model 3 maybe in 3rd quarter 2019. The Shanghai factory suppose to start production by end of the year with a target of 3,000 cars per week. They will only produce the standard range model 3 there and import the other cars. There will probably be no shortage of demand in China for many years. The market for EVs there is much larger than US and Europe combined and performance Model 3 undercuts the Germans by almost 1/2 price.

      Overall I think they will be capacity constrained, rather than demand at least through 2019.

      • 0 avatar

        If they wanted to increase demand, they could start offering leasing for the 3.

      • 0 avatar
        SCE to AUX

        Yes, but I think the Shanghai factory currently consists of a plowed field and a perimeter fence. I can’t see it producing a single car in 2019.

        • 0 avatar

          End of year is their stated goal to begin production. I don’t think Elon has ever delivered a goal on time.

          Tesla has essentially been given the ball in China and told to run with it. It’s a sweat-heart deal, so there is nothing really to constrain them aside from their own ineptitude, which is something that they are working on.

  • avatar

    “Our own car carriers.” Right, right.

  • avatar
    Art Vandelay

    Makes sense…the people whanting a “cheap” Tesla would likely go for the model 3. I’d expect a move upmarket when the S gets refreshed.

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