Tesla continues to play the pricing card to build volume across its entire vehicle lineup, launching cheaper versions of its Model S and Model X electric vehicles. The new cars are less expensive, but there is another reason for the new options.
New standard-range versions of the Model S and X are now available on Tesla’s website. The standard-range S starts at $78,490 while the standard-range Model X starts at $88,490—both $10,000 cheaper than their respective earlier models. They will be available for delivery between September and October.
The standard-range version of the Model S has an estimated driving range of 320 miles while the Model X has a range of 269 miles. The base versions have ranges of 405 miles and 348 miles, respectively.
Tesla has cut prices several times in 2023, most recently on some of its Model Y trims in China. Price cuts have helped Tesla deliver a record number of cars in the first half of 2023, some 890,000 units up about 57% year over year, but the cuts have come at the expense of profit margins. Tesla reported operating-profit margins of 10.5% in the first half of 2023, down from 17% in the first half of 2022.
This isn’t really a price cut, though. They are new versions, previously not on sale.
There are a couple of reasons to expand the product lineup with shorter-range EVs. One is because there is market demand for it, which could be a sign that Tesla drivers don’t really suffer from range anxiety—or the fear of running out of juice with a charger nowhere in sight.
There is a good reason for that. Tesla owns and operates the largest network of fast chargers in the U.S. Eventually charging infrastructure gets to a point where drivers don’t feel like they need bigger batteries. And fewer batteries in a car, of course, lowers the price of an EV.
Tesla could also be offering standard-range versions because battery supply is opening up. Tesla uses lithium-iron-phosphate, or LFP, batteries in some standard-range models. Those batteries typically come from China’s
Contemporary Amperex Technology Co Ltd
(300750.China), which is better known as CATL.
More battery supply can mean lower prices for batteries too. Tesla didn’t respond to a request for comment about new versions or battery supplies.
Tesla stock is down 0.7% at $238.10 in premarket trading on Tuesday.
S&P 500
and
Nasdaq Composite
futures are down 0.6% and 0.7%, respectively.
Shares have rocketed 95% this year so far.
Write to Adam Clark at [email protected]
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