Tesla’s entry-level Model S gets a $2,000 price hike

Tesla re-launched the Model S 60 and 60D to boost sales by giving buyers a lower-priced option. The move no doubt had an impact, as Tesla made a profit for the first time in two years last quarter and increased sales by 59 percent over last quarter.

While the lower-priced model may be helping drive sales, another recent Tesla move has likely increased costs. Each vehicle, including the upcoming Model 3, will be manufactured with the eight cameras and 12 sensors needed for fully autonomous self-driving capability. (Prior to that, customers had to order the feature or the hardware wouldn’t be installed.) If buyers don’t pay up to $8,000 to activate autonomous features, the hardware will just sit there doing nothing.

U.S. Senate Commerce, Science & Transportation Committee Hearing On Self-Driving Cars
Bloomberg via Getty Images

Interestingly, Tesla also does a similar trick with the 60 kWh battery capacity on the Model S 60 and 60D. Those vehicles actually come with a 75 kWh battery, but the extra capacity is locked off by software. To “upgrade,” you just need to pay a $9,000 fee, and upon confirmation, “the over-the-air process will be initiated and the upgrade will occur during a vehicle sleep cycle over the next 1-2 days,” according to Tesla’s online store. Your local dealer will even change the badge afterwards.

In other words, Tesla is installing feature in its vehicles and hoping that customers who initially opt-out will eventually upgrade. Using the same pieces in all cars will no doubt make its production process more efficient, but it may have needed to make up the shortfall in costs with the price increase. It’s also cutting the free supercharging perk for cars sold after December 31st, 2016, which will also save it some money. On an unrelated note (we think), Tesla shareholders will vote on the Tesla and SolarCity merger on Thursday, November 17th.

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