Tesla has once again removed the base level Model S from the line-up. So why does the Palo Alto company keep giving us this enticing car, only to take it away?
On paper, the entry-level Model S was a win-win for everybody. It was a relatively cheap way in to the Tesla club, with prices starting from $67,200. Tesla could also offer an over the air upgrade for the car if the owner suddenly found some spare change behind the sofa and turn it into a Model S 75D without messing with the hardware.
The Model S 60 was a potential upsell
It was a classic upsell opportunity, but last month the company quietly phased out the cheapest model and then dropped the price of the 75 by $7,500.
Why? We have no idea if we’re honest. We can speculate, as others have, and suggest that it’s somehow related to the approach of the end of the Federal tax credits.
Tesla says it wants to “simplify the ordering process.” But that basically means nothing at all.
We can look at the fact that it reduced the number of optional extras and increased the standard equipment on the 75D, including the rather extravagant glass roof and automatic lift tailgate. Then it removed air suspension and 72-Amp onboard charger, saving those special options for the cars higher up the food chain.
Was the 60 S more trouble than it was worth?
This seems to suggest it cost more to offer certain aspects as a cost option rather than simply account for them going on every car. It also means Tesla might have analyzed its line-up and realized that the various models needed more differentiation than just power and range.
The Palo Alto company has recently invested heavily in automation and process engineering, acquiring production line specialist Grohmann Engineering in Germany to help it master the art of mass production.
That’s going to be a big deal with the Model 3, which is the company’s first real volume product, but of course it can apply the lessons it has learned to the more expensive Model S and Model X. One of the first lessons might have been that Tesla is complicating its own life with the lower end Model S and it simply isn’t making enough money on each car to justify its existence.
One cut after another
So, after a confusing month, where Tesla first lowered the price of the upgrade from a Model S 60 to a 75 to just $2000, it then cut the sales completely.
“One year ago, we introduced the Model S 60 kWh battery as a more affordable option to accelerate the adoption of electric vehicles,” said an official Tesla email. “However, most customers ended up buying an equivalent to the Model S 75kWh. To simplify the ordering process for our customers, we will be removing the 60 kWh option from our lineup.”
This isn’t the first time…
The weird thing is, it’s not the first time Tesla has done this. The company reintroduced the Model S less than a year ago, in June 2016, with a price of $66,000. That increased by $2000 in November and Tesla was clearly having trouble finding a balance between value and profit.
It was the same the first time around. Tesla launched the Model S in 2012 with the 60kWh and 85kWh options. The 60kWh battery returned a range of 210 miles and it did the job. Tesla even toyed with a 40kWh version, before cancelling the proposed launch.
This car has died twice
In 2015, the announcement of the 70kWh option signaled the end of the Model S 60’s first life and the company freely admitted the demand simply wasn’t there for a low-power version.
It isn’t that much of a shock that Tesla has cancelled the lower end Model S this time around. The Model 3 is coming, there will undoubtedly be a variety of batteries on offer in the near future and in the end the Model 3 would step on the Model S’s toes.
That doesn’t seem to cause problems for the likes of BMW and Mercedes, who both offer low-power and surprisingly affordable versions of the 5 Series and E-Class respectively. But Tesla may have run the numbers, looked at its available capacity and simply decided that the price it will pay in lost sales simply pales into insignificance when it applies those resources elsewhere.
Was this resurrection a rare Musk screw-up?
No, the real surprise is that Tesla knew that the Model 3 was coming, it knew everything, and yet it still chose to reintroduce that ill-fated Model S 60. It’s hard to gauge how much it costs to reintroduce and then eliminate the model, but it cannot be free.
Tesla boss Elon Musk has always seemed willing to wing it and make a plan on the fly. In that respect, he’s a breath of fresh air in the automotive industry and many of the things he has achieved would have been simply impossible with a more rigid and structured approach.
So, we have to take the rough with the smooth and we have to give the Palo Alto company a little slack when it comes to the odd mistake. But there’s no doubting the fact, that’s what the Tesla Model S 60 has become. Whatever the case, after the second coming, we really think we’ve seen the back of it this time.