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Tesla Kills The Entry-Level, 40 kWh Model S Citing Poor Demand

The Model S just got a little more expensive. Tesla just announced that the company will no longer offer the least expensive Model S electric sedan. Per a Tesla press release, since its launch, only 4% of buyers opted for the 40 kWh model with its paltry 160 mile range. Instead, buyers have spent the extra cash on the more capable and better performing models.

The entry-level Model S cost $52,400 after the US Government’s $7,500 tax credit. At that price the 40 kWh Model S provided Tesla with a relatively competitive price point, putting the Model S on par with a BMW 5 Series or Cadillac XTS. But Tesla’s sales numbers clearly show that buyers didn’t mind spending more cash to get more range and better motoring performance of the higher priced options.

Tesla will still deliver a 40 kWh model to those who previously reserved one — it will just be a 60 kWh spec electronically limited to only provide 40 kWh’s of range.

At first blush it seems like a raw deal, but it’s fair. With this model, Tesla is fulfilling its end of the bargain, plus, since the vehicle will be equipped with a more powerful battery pack, the car will be quicker and more responsive than the standard 40 kWh trim. In additional, it will come packing the goods to hook up to Tesla’s ever-expanding SuperCharger network — previously an optional upgrade.

In the future the additional 20 kWh can be unlocked for $10,000, which is the current price between the 40 kWh and 60 kWh.

This announcement came along with a side note of Model S sales numbers. Tesla indicated that Model S sales exceeded the target indicated in the mid-February shareholder letter, with sales currently at 4,750 units rather than 4,500. Apparently NYT vs Musk didn’t hurt the company after all.


Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
eschwerin@rosemontseneca.com
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