In what feels like a scheduled announcement at this point, Tesla has once more overhauled its vehicle pricing. The company cut the starting price of the Standard Range Plus version of the Model 3, which it has claimed to see strong demand for, by about $900 to $38,990. While Tesla still sells the cheaper Standard Range version of the Model 3 -- it was long hyped as a $35,000 Model 3, although it now sells for a little more than that -- via phone, the Standard Range Plus is the cheapest version of the car available online.
Tesla has also eliminated the Standard Range versions of the Model S and X, which had starting prices of $75,000 and $81,000, respectively. As a result, Tesla now only sells the Long Range and Performance versions of each car, with the Long Range Model S starting at $79,990, and the Long Range Model X starting at $84,990. The moves come three months after Tesla unveiled Model S and X refreshes that deliver better range and faster charging times.
In addition, four months after it discontinued the Mid Range, rear-wheel drive version of the Model 3, Tesla has discontinued the Long Range, rear-wheel drive version of the car, which had been available over the phone. And it has also made its "Ludicrous" packages, which enable a 0-60 mph time of 2.4 seconds on the Model S and 2.7 seconds on the Model X, standard on the Performance version of the cars; they were previously sold as $20,000 options.
Much like the overhaul that Apple (AAPL) announced for its MacBook lineup last week, Tesla's latest moves serve to simplify its marketing message. The Standard Range Plus and Standard Range Model 3 are positioned as the company's mass-market options. The dual-motor, all-wheel drive versions of the Model 3, which respectively start at $47,990 and $54,990, are aimed at more affluent electric car buyers willing to pay extra for more range and performance. And the Model S and X are now firmly positioned as Tesla's luxury car options.
In late 2020, provided Elon Musk's company hits its launch timetable, versions of Tesla's Model Y crossover will arrive that also fit into the second of these three categories. And in the spring of 2021, a Standard Range version of the Model Y is due that should fit into the first category.
One other possible takeaway from the price changes is that -- in spite of competition in the luxury electric car market from the likes of Audi, Porsche and Jaguar Land Rover -- Tesla is now more comfortable charging a healthy premium for the Model S and Model X relative to the Model 3. With the Model 3 having (from all indications) cannibalized some Model S demand, Tesla might feel that those who are still in the market for one of its costliest vehicles aren't all that price-sensitive.
The fact that these moves come at a time when Tesla has been carrying out layoffs and other cost-cutting moves to boost its bottom line also can't be ignored. Though the price cut announced for the Standard Range Plus Model 3 carries a margin hit, this could be more than offset by the margin boost provided by eliminating the Standard Range versions of the Model S and X.
In April, Tesla forecast it would be profitable during the last two quarters of 2019, and would be cash-flow positive for the last three quarters. However, it made no mention of this guidance -- or for that matter, a full-year deliveries outlook of 360,000 to 400,000 vehicles -- in a stronger-than-expected Q2 deliveries report that was released in early July.
In light of all this, the timing of Tesla's pricing changes is definitely interesting. The results and guidance shared in the company's Q2 report, which arrives on the afternoon of July 24, should provide some more context.