Tesla Motors Inc (NASDAQ:TSLA) is upgrading the older version of its electric sedan the Model S. The company is putting a 15% bigger battery and all wheel drive in the new car, but it’s increasing the price of the vehicle to compensate. According to a Wall Street Journal piece on the upgrade, the new model of the car will cost $75,000.
The older base Model S Tesla cost $71,000. Shares in the Palo Alto, California company were trading up by more than 3% this morning as a result of the announcement. Tesla Motors Inc (NASDAQ:TSLA) has, according to a recent Tweet from CEO Elon Musk, a new product to show off at the end of April. Musk was concrete in stating that the product was not a car, meaning that the new Tesla Model S is a separate matter entirely.
Tesla upgrades the Model S
The new base model of the Tesla Motors Inc (NASDAQ:TSLA) Model S will have a battery capacity of 70 KWh. That’s up from the 60 KWh battery that the company currently offers in its cheapest model. Tesla will continue to sell higher priced models with even bigger battery capacities alongside the new base Model S.
The 70D, as Tesla Motors is calling the new version of its Model S sedan, will have a range of approximately 240 miles. The all-wheel drive feature will make the car a more attractive buy for those in areas suffering from hard winters, with the Northeast of the United States being the obvious target.
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This is not the first time that Tesla has decided to discontinue one of its car models. Tesla used to offer a 40 kilowatt hour version of the Model S, but discontinued it soon after release. The size of the battery limited the range of that model to around 150 miles, something that didn’t reflect well on the company’s vision for the future of the electric car.
Tesla range is still an issue
Despite an announcement earlier this year that Elon Musk said would “end range anxiety,” Tesla Motors Inc (NASDAQ:TSLA) is still looking at range as a key selling point for its vehicles. The company’s decision to increase the battery capacity of its most limited model is proof of that idea.
The new model will also feature the charging apparatus necessary to use the Tesla Motors Inc (NASDAQ:TSLA) supercharger network. That hardware was previously optional in the lowest-price version of the company’s electric car.
Self driving Tesla at a low price
The 70D Model S includes a range of sensors that will be able to direct the Tesla Motors Inc (NASDAQ:TSLA) Model S should the driver instruct it to drive itself. The company has promised that a software update coming later this year will allow cars with the right sensors to drive themselves.
Elon Musk has been promising revolutionary self-driving technology to Tesla Motors Inc (NASDAQ:TSLA) owners for quite a while. Its availability in the lowest priced Model S means a maximum number of people able to relinquish control of their cars this Summer.
Update 11:24 EST: At time of writing shares in Tesla Motors Inc (NASDAQ:TSLA) were trading for 206.36, up 1.53% for the day. The initial surge in optimism surrounding the launch of the new base Model S was levelled by worries about the margin effects of the new Tesla model.
The 15% bump in the size of the battery in the new Model S may actually end up costing more than the additional $4,000 the company is charging for the new electric Sedan. That would result in a fall in margins for the company for the rest of the year.
On top of that, some investors on Twitter expressed worries that the 70D release meant that Tesla Motors Inc (NASDAQ:TSLA) had sold, or will sell, its old base Model at reduced prices. The margin impact of the new Tesla Model S will be seen when the company reveals its financial situation for the first quarter once the market closes on May 5.