Tesla has introduced more affordable options for its Model S sedan and Model X SUV, offering shorter driving ranges. This move comes as the company aims to boost sales in light of high borrowing costs affecting demand for expensive electric vehicles. The announcement caused concern among investors, leading to a drop in Tesla’s stock price by 2.6%. Rivals Rivian and Lucid also experienced losses.
To prioritize sales growth over profit margins, Tesla has already reduced vehicle prices in various markets worldwide, including the US and China. To further reduce inventory, the Austin-based company is implementing additional incentives, following a strategy outlined by CEO Elon Musk as part of Tesla’s recession playbook.
The new “standard range” Model S and X models are priced at $78,490 and $88,490, respectively. However, their driving ranges are lower than the more expensive dual motor and tri-motor variants. The Model S offers up to 320 miles of range, while the regular dual motor and tri-motor Plaid models provide up to 405 miles and 396 miles, respectively. The Model X SUV has a range of up to 269 miles, compared to the higher-end versions that offer up to 348 miles.
Interestingly, although the standard range models have the same battery and motors as their more expensive counterparts, they will be limited in terms of performance and range through software restrictions. According to Tesla sales representatives, there is currently no plan to unlock the full range and performance capabilities in the future.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, explains that the intention behind these new variants is to attract consumers who desire the Tesla badge and electric vehicle experience but may have reservations due to the higher price compared to competitors.
Tesla plans to make the new models available for delivery between September and October. Despite facing challenges, the company remains the world’s most valuable automaker and experienced a 19% increase in sales for its older and higher-end Model X and S vehicles in the second quarter. However, the lower average selling prices and reduced sales of its more expensive models have impacted Tesla’s operating income and revenue.
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