Tesla Reduces Prices on Model S and Model X, Also Offers Cheaper Autopilot in the US and Canada
On the first day of fall, Tesla made headlines not only for the debut of the updated Model 3 but also for reducing the prices of its flagship vehicles, the Model S and Model X. Notably, in the Chinese market, these price cuts reached as much as 20%. In the United States, these vehicles also saw significant price reductions. Additionally, Tesla has made the Full Self-Driving (FSD) option more affordable for customers in the US and Canada, enabling minimal driver intervention in the control process.
Around a year ago, Tesla raised the price of the FSD option from $12,000 to $15,000, with Elon Musk justifying the increase by citing the added value from software updates. Now, the cost of FSD in the US has returned to the previous $12,000, although the subscription option for FSD remains at $199 per month. Owners of Tesla vehicles produced between late 2016 and mid-2019 must pay an additional $1,000 for the onboard computer upgrade. In Canada, the price of FSD also dropped by a comparable amount, from CAD 19,500 to CAD 16,000. However, in Europe, the cost of this option remains unchanged, but the capabilities of the FSD package in these regions are more limited due to Tesla’s ongoing work to train its neural networks for autonomous driving based on local road conditions.
Turning to Tesla’s pricing strategy for electric vehicles, in China, the updated Model 3 saw a 12% price increase in its base version. Considering the increased range and presumably improved noise insulation, this price hike might be considered justified. Nevertheless, the Chinese electric vehicle market is highly competitive, and there’s no guarantee that Tesla won’t have to reduce the price of the Model 3 in the near future. Model S and Model X vehicles account for less than 3% of Tesla’s overall deliveries, so the price reduction is unlikely to significantly impact the company’s revenue or profit margin. It’s more symbolic in nature. Both Model S and Model X are imported to China from the United States, making Tesla’s 20% price reduction in China rather generous. The base versions of Model S and Model X in China are now 14% and 18% cheaper, respectively.
On September 1st, Tesla also lowered the prices of its flagship electric vehicles in the United States. The Model S saw a price reduction of $3,500, now priced at $74,990, while the Model X dropped by $8,500, putting it in the “under $80,000” price range, making it eligible for US government subsidies. Certain buyers of the Tesla Model X in the United States can now potentially receive up to $7,500 from the government. Considering that at the beginning of the year, the Model X in the US was priced at $120,990, it has now become $41,000 cheaper by early September, not accounting for potential subsidies of $7,500.
In summary, Tesla’s motivation for lowering prices on its flagship electric vehicles is clear: in the US, it is aligning their base prices with the requirements of local subsidy programs to stimulate demand. In China, the company is striving to maintain its market position without any specific plans for local production of these models, amidst fierce competition from numerous domestic rivals.
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- I'm Vasyl Kolomiiets, a seasoned tech journalist regularly contributing to global publications. Having a profound background in information technologies, I seamlessly blended my technical expertise with my passion for writing, venturing into technology journalism. I've covered a wide range of topics including cutting-edge developments and their impacts on society, contributing to leading tech platforms.
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