Tesla Lowers Price of the Model X

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【Summary】​Tesla lowered the base price of its Model X crossover to $79,500, stating improving margins were behind the move, which came as the automaker is ramping up production of its new lower-priced Model 3.

Original   Eric Walz  ·  Aug 05, 2017 3:00 PM PT
author: Eric Walz   

Tesla lowered the base price of its Model X crossover to $79,500, stating improving margins were behind the move, which came as the automaker is ramping up production of its new lower-priced Model 3.

Some analysts have been concerned that the launch of the Model 3, which has a base price of $35,000, would steer some potential buyers away from the Model X to that lower-priced sedan.

However, CEO Elon Musk said earlier this week that the Model X's demand had not waned.

"When we launched Model X 75D, it had a low gross margin. As we've achieved efficiencies, we are able to lower the price and pass along more value to our customers," Tesla in a statement on Friday announcing it had lowered the vehicle's price by $3,000.

The Model X has various configuration options, which increase the cost significantly more than the base price of $79,500. For example, the most expensive version of the Model X, the P100D, with fastest acceleration and longer range, costs $145,000.

Musk said on a call with analysts earlier this week that the launch of the Model 3 had not cannibalized Model X sales, and that demand for the Model X as well as the Model S had actually increased with the release of the lower-priced vehicle.

The Model 3, marketed as a car for the masses, begins at $35,000 before incentives, but a longer-range version is priced at $44,000, to compete with high volume luxury sedans such as the Audi A4, BMW 3 series and Mercedes C class.

Tesla does not break out gross margins of its individual models, but overall gross margins excluding stock-based compensation and revenue from zero-emission vehicle credits fell to 25 percent in the second quarter from 26.4 percent a year earlier, due to the Model 3 build.


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