Tesla has quietly reduced the Model X price, making good on the promise it made before the launch of the Model X, notes Electrek. Prior to the launch, Elon Musk said the company aimed to make the Model X price about $5,000 more expensive than that of the Model S. However, that was not the case until now.
Model X price dropped
Before the price drop, the entry-level Model S was tagged at $74,500, whereas the Model X 75D started at $82,500. However, after the $3,000 price drop, the new Model X 75D with the standard 5-seat configuration comes in around $79,500, notes Electrek.
Shedding some light on the sudden price drop, the company stated, “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.”
In addition to dropping the price, the company made one more user-friendly move by adding several standard options to the performance versions of the Model S and Model X. The new options make more premium features standard rather than options available for additional money. In fact, the features in the Premium Package, which previously cost an extra $5,000, have now been made standard.
Tesla expects a stronger second half
Just a couple of days ago, the company announced that July orders for the Model X and Model S were up 15% from Tesla’s average weekly order rate during the second quarter. Further, Model S orders are increasing at a high rate following the deliveries of the 30 Model 3s.
“This growing demand gives us even more reason to expect increased deliveries of Model S and Model X in the second half of the year,” Musk told shareholders.
Tesla achieved the lower end of its delivery guidance for the first half of the year. However, in the second half of the year, the company expects higher deliveries, supported by the sales numbers of the Model X. On Wednesday, the Palo Alto-based automaker also revealed that it has been receiving more than 1,800 reservations daily for the Model 3 since it delivered the first 30 cars. About 63,000 customers have canceled their orders for the Model 3.
Explaining the cancellations, Musk said, “It’s like if you’re a restaurant and you’re serving hamburgers and there’s like an hour-and-a-half wait for hamburgers – do you really want to encourage more people to order more hamburgers.”
So far, the company has spent over $2 billion in cash this year, and for the next half, the company expects to spend another $2 billion. Although critics have always been skeptical about Tesla’s aggressive spending, investors seem to be on the side of Musk, hoping for better returns from the company’s clean energy efforts and Model 3 success.
“Early Model 3 launch milestones look strong, but the US$2bn of 2H capex will make your eyes water,” said Morgan Stanley analyst Adam Jonas. “Time will tell if they are tears of joy.”
At 9:38 a.m. Eastern, Tesla shares were down 0.03% at $346.88. Year to date, the stock is up almost 62%, while in the last year, it is up almost 50%.
Update: the earlier version of article wrongly said that Tesla’s dual-motor Model S also got a $1,500 price cut. That line has been removed.