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Tesla Cuts Prices for Second Time in Two Months

Company lops money off top models this time.

by on Aug.31, 2017

Tesla CEO Elon Musk cut prices on vehicles for the second time in the last two months.

Is Tesla feeling pinched by ever-growing competition? For the second time in the last two months, Elon Musk has gone all “Crazy Eddie,” cutting prices this time on the EV maker’s highest-priced models.

While “Crazy Eddie” is an exaggeration, the company cut the prices on the Model S and Model X 100D by $3,500. The performance versions of each, the P100D, saw a $5,000 price drop. So is this a proactive move to head off competitors?

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Nah. Tesla says production costs for the 100-kilowatt battery packs have falling, and the company is simply passing along the savings to potential customers. The new price tag is similar to the prices seen before a price increase on the same models back in April of this year, but the current models offer more features than before.

(Tesla cuts price on Model X and drops buyback guarantee. For the story, Click Here.)

Tesla cut prices on the 100kW Model S as well as the Model X.

Before a chorus of complaints rises up, Tesla also said the cuts would be granted retroactively for buyers waiting on undelivered 100 kW models. The new starting prices now sit as follows:

  • Model S 100D: $94,000
  • Model S P100D: $135,000
  • Model X 100D: $96,000
  • Model S P100D: $140,000

The price cuts mark the second time this summer Tesla’s reduced prices on vehicles. In July, the company cut $9,000 from the Model X 60D down to $74,000. Tesla also did away with the guaranteed buyback program that covered the Model S sedan, assuring owners they would get at least 50% of the purchase price back after three years.

The company also lopped off one of its “bottom-end” iterations last month, cutting the Model S 75, which was the least expensive model the EV maker offered prior to the Model 3. The rear-wheel drive Model S 75 started at $69,500, but now the least expensive Model S is the 75D, an all-wheel-drive version of the 75 that starts at $74,500.

(Tesla cutting from the bottom: kills Model S 75. To find out why, Click Here.)

That cut came as the new Model 3 was getting ready to roll off the production line at the company’s plant in Fremont, California. The move appeared to be designed to put some pricing difference between the most expensive Model 3 and the least expensive Model S.

Had the cut not been made, a loaded up Model 3 would have been just $5K less than the cheapest Model S. Not good as you’re looking to attack the mainstream market with a new model.

Investors have been showing their faith in Musk and the company as Tesla’s share price has risen 54% since January despite the fact that the company has blown through $2 billion to launch the Model 3. Tesla’s valuation now exceeds that of General Motors Co and Ford Motor Co.

(For more about the Tesla Model 3, Click Here.)

He’s going to need both their faith and some profits because Musk has more products in the pipeline, including a semi-truck, a pickup truck and other vehicles to add to the line-up and all of those different vehicles have one common need: cash.

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