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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- Max So GM will be making TESLAS in the future. YEA They really shouldn’t be taking cues from Elon musk. Tesla is just about to be over.
- Malcolm It's not that commenters attack Tesla, musk has brought it on the company. The delivery of the first semi was half loaded in 70 degree weather hauling potato chips for frito lay. No company underutilizes their loads like this. Musk shouted at the world "look at us". Freightliners e-cascads has been delivering loads for 6-8 months before Tesla delivered one semi. What commenters are asking "What's the actual usable range when in say Leadville when its blowing snow and -20F outside with a full trailer?
- Funky D I despise Google for a whole host of reasons. So why on earth would I willing spend a large amount of $ on a car that will force Google spyware on me.The only connectivity to the world I will put up with is through my phone, which at least gives me the option of turning it off or disconnecting it from the car should I choose to.No CarPlay, no sale.
- William I think it's important to understand the factors that made GM as big as it once was and would like to be today. Let's roll back to 1965, or even before that. GM was the biggest of the Big Three. It's main competition was Ford and Chrysler, as well as it's own 5 brands competing with themselves. The import competition was all but non existent. Volkswagen was the most popular imported cars at the time. So GM had its successful 5 brands, and very little competition compared to today's market. GM was big, huge in fact. It was diversified into many other lines of business, from trains to information data processing (EDS). Again GM was huge. But being huge didn't make it better. There are many examples of GM not building the best cars they could, it's no surprise that they were building cars to maximize their profits, not to be the best built cars on the road, the closest brand to achieve that status was Cadillac. Anyone who owned a Cadillac knew it could have been a much higher level of quality than it was. It had a higher level of engineering and design features compared to it's competition. But as my Godfather used to say "how good is good?" Being as good as your competitors, isn't being as good as you could be. So, today GM does not hold 50% of the automotive market as it once did, and because of a multitude of reasons it never will again. No matter how much it improves it's quality, market value and dealer network, based on competition alone it can't have a 50% market share again. It has only 3 of its original 5 brands, and there are too many strong competitors taking pieces of the market share. So that says it's playing in a different game, therfore there's a whole new normal to use as a baseline than before. GM has to continue downsizing to fit into today's market. It can still be big, but in a different game and scale. The new normal will never be the same scale it once was as compared to the now "worlds" automotive industry. Just like how the US railroad industry had to reinvent its self to meet the changing transportation industry, and IBM has had to reinvent its self to play in the ever changing Information Technology industry it finds it's self in. IBM was once the industry leader, now it has to scale it's self down to remain in the industry it created. GM is in the same place that the railroads, IBM and other big companies like AT&T and Standard Oil have found themselves in. It seems like being the industry leader is always followed by having to reinvent it's self to just remain viable. It's part of the business cycle. GM, it's time you accept your fate, not dead, but not huge either.
- Tassos The Euro spec Taurus is the US spec Ford FUSION.Very few buyers care to see it here. FOrd has stopped making the Fusion long agoWake us when you have some interesting news to report.
"If this really sounds like a price increase to you, you’d be right." You just finished saying the Model 3 price dropped. It's worth noting that the Model 3 sells 4x the volume of S&X combined. Pricing of the S&X isn't very relevant anymore.
I am annoyed at Tesla putting in a large battery that adds weight but does not give full use unless you pay extra. They also include options that can only be activated with $$. They sell cars like EA sells games. I also don't see how they are going to sell their way out of the huge debt they keep kicking down the road. At $80K there are a lot of other luxury cars that require a lot less thought about how far you can drive in a day.