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Abu Dhabi, UAETuesday 19 June 2018

Tesla cuts price on Model X SUV

'Efficiencies' enable electric car maker to pass along more value to customers

Tesla Model X at the Tesla Supercharger station at The Last Exit, Jebel Ali. Victor Besa for The National
Tesla Model X at the Tesla Supercharger station at The Last Exit, Jebel Ali. Victor Besa for The National

Tesla has lowered the base price of its Model X 4x4 to US$79,500 and said improving margins were behind the move, which came as the car maker is increasing production of its new lower-priced Model 3.

Some analysts have been concerned that the launch of the Model 3, whose base price is $35,000, would steer some potential buyers away from the Model X SUV to that lower-priced saloon.

But the chief executive Elon Musk said demand had not waned for the luxury electric 4x4.

"When we launched Model X 75D, it had a low gross margin. As we've achieved efficiencies, we are able to lower the price and pass along more value to our customers," Tesla said at the weekend, announcing it had lowered the previous $82,500 starting price of the vehicle by $3,000.

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In June, the Model X, then at the original price, achieved a perfect 5-star rating from the US national traffic safety, making it the safest SUV ever tested, according to CNN.

The most expensive version of the Model X, the P100D, with fastest acceleration and longer range, costs $145,000.

Mr Musk said the launch of the Model 3 had not cannibalised Model X sales, and that demand for the Model X as well as the Model S had actually increased with the release of the lower-priced vehicle.

The Model 3, marketed as a car for the masses, begins at $35,000 before incentives, but a longer-range version is priced at $44,000, to compete with high volume luxury saloons such as the Audi A4, BMW 3-series or Mercedes C-Class.

Tesla does not break out gross margins of its individual models, but overall gross margins excluding stock-based compensation and revenue from zero-emission vehicle credits fell to 25 percent in the second quarter from 26.4 percent a year earlier, due to the Model 3 build.

* Reuters