Tesla Drops Cheapest Model S to Pave the Way for Model 3

Buyers have until April 16 to order Tesla’s Model S 60, after which its cheapest model will be the S 75 and the barrier to entry after-tax-credit will rise from $71,300 to $77,800.

Tesla’s move came shortly after Lucid Motors announced initial pricing for its Air sedan, which is scheduled for initial deliveries in early 2019. Using the same net pricing after the $7,500 federal credit, the Air will start at $52,500.

SEE ALSO: How Many Tesla Model 3 Buyers Will Be Eligible For $7,500 Federal Tax Credits?

Tesla also recently tapped the capital markets for an additional $1.2 billion to help launch its intended volume leader, the Model 3, which is planned to start production in July. With a starting price of around $35,000 plus undisclosed destination fee, a fully-optioned Model 3 will very likely approach the lower-end of the Model S’s range. By removing the lowest-priced Model S, Tesla appears to be giving some breathing room in its marketing strategy for the cars.

Although the earlier 60-kWh Model S had an actual 60-kWh battery, the current Model S 60 has been equipped with a 75-kWh battery pack that was limited by its software to 60 kWh.

Owners could pay to free up the additional 15 kWh and many did, suggesting that Tesla could drop the base model with little impact on sales. A Model X with the same battery pack was proposed last year, but was quietly shelved.