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Tesla reduces price of Model X, saying margins enhanced

Tesla Inc on Friday reduced the base price of its Model X SUV to $79,500 and stated enhancing margins lagged the move, which came as the automaker is increasing production of its new lower-priced Model 3.

Some experts have been worried that the launch of the Model 3, whose base cost is $35,000, would guide some prospective buyers far from the Model X SUV to that lower-priced sedan.

However CEO Elon Musk stated before that demand had not subsided for the high-end electric sport-utility automobile.

“When we launched Model X 75D, it had a low gross margin. As we’ve accomplished efficiencies, we have the ability to reduce the price and pass along more value to our consumers,” Tesla stated, announcing it had reduced the previous $82,500 starting cost of the vehicle by $3,000.

The most costly version of the Model X, the P100D, with fastest velocity and longer range, is priced at $145,000.

Musk stated on a call with experts earlier this week that the launch of the Model 3 had not cannibalized Model X sales, which demand for the Model X along with the Model S had increased with the release of the lower-priced vehicle.

The Model 3, marketed as a vehicle for the masses, starts at $35,000 prior to incentives, however a longer-range version is going to cost $44,000, to take on high volume luxury sedans such as the Audi A4, BMW 3-series or Mercedes C-Class.

Tesla does not break out gross margins of its specific models, but total gross margins omitting stock-based compensation and revenue from zero-emission automobile credits was up to 25 percent in the second quarter from 26.4 percent a year previously, because of the Model 3 build.

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