As Model 3 production ramps up, Tesla lowers the price of Model X SUV

Tesla Inc on Friday lowered the base price of its Model X SUV to $79,500 and said improving margins were behind the move, which came as the automaker is ramping up production of its new Model 3.

Tesla has decreased the price of Model X. Wikimedia.

Tesla has decreased the price of Model X. Wikimedia

 

Some analysts have been concerned that the launch of the Model 3, whose base price is $35,000, would steer some potential buyers away from the Model X SUV to that lower-priced sedan. But Chief Executive Elon Musk said earlier this week that demand had not waned for the luxury electric sport-utility vehicle. "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 previous $82,500 starting price of the vehicle by $3,000. 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, or 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.


Published Date: Aug 05, 2017 04:44 pm | Updated Date: Aug 05, 2017 04:44 pm