Tesla, who wants you to know that they are definitely, certainly not facing a demand problem, has again dropped the price of its Model 3 while bumping up starting prices of its Model S and Model X in what appears to be a push to drive more Model 3 sales and higher margin Model S and X sales. The move comes days after the company reported record Q2 deliveries, according to Reuters.
On Tuesday, Tesla limited variants of its Model X and Model S to “Long Range” and the more expensive “Performance” models. The company also slashed the price of its now entry-level “Long Range” variants. This means that the new starting price for these models has gone up to $84,990 for the Model X and $79,990 for the Model S.
At the same time that the company is trying to sell more of its expensive vehicles, it also lowered the starting price of its Model 3 to $38,990.
The company said in a statement:
“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. We are also adjusting our pricing in order to continue to improve affordability for customers.”
So the company is going to improve affordability by cutting out its lowest end, cheapest Model S and Model X variants? Got it.
The move comes just weeks after Tesla set a global deliveries record in Q2. Deliveries were up 51% to a record of 95,200 vehicles. The Model 3 accounted for about 80% of this total and Tesla has said that they expect production and deliveries to continue growing in Q3.
The changes also raised prices in China, where there had previously been protests about the fluctuating prices of Tesla vehicles. The new starting price of the Model X is 790,900 yuan ($115,068) and Model S is 776,900 yuan.
As one astute Twitter observer pointed out, Tesla needs to fill a major gap in its sales for Q3 with sales in the EU and China. This could prompt further cuts globally in short order.
5) EU & China weak demand is a Q3 risk. $TSLA‘s US sales in Q3 face a huge hurdle from Q3’18. Even if $TSLA‘s Q3 sales are flat w/ Q2 in the US, it will still be down -23% YoY. $TSLA needs the EU & China to fill that gap. Expect steeper price cuts globally by Sept. $TSLAQ pic.twitter.com/MMFSyE86gU
— @Motorhead (@BradMunchen) July 16, 2019