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Tesla will discontinue entry-level Model S and Model X cars with 75-kWh battery

2016 Tesla Model S P100D

The base price of Tesla Model S and Model X electric cars is about to shoot up. On Wednesday, Tesla CEO Elon Musk announced that the automaker would stop selling the 75-kilowatt-hour battery pack in both cars. Customers have until January 13 to order cars with the smaller (and less expensive) battery pack.

Tesla has reshuffled battery-pack options for the Model S and Model X multiple times, but this change means both cars will now be available with only Tesla’s largest 100-kWh battery pack. Unless Tesla has new variants planned, the elimination of the entry-level 75-kWh variants will cause a major increase in prices. The base price of the Model S is set to jump from $77,200 to $95,200, while the Model X’s base price will increase from $83,200 to $98,200.

The change should help further separate the Model S and Model X from the Model 3. On paper, the Model 3 is supposed to be Tesla’s entry-level model, with the Model S and Model X positioned above it in the lineup. But the Model 3 currently starts at $46,200, and prices can rise to $71,200 with options. Tesla hasn’t started deliveries of the base version of the Model 3, which will start at $35,000. Those cars will be available in four to six months, according to Tesla’s website.

With pricing as it is, the Model 3 and a lightly-used Model S are close enough that customers could cross-shop them, which probably isn’t what Tesla wants. But dropping the 75-kWh version of the Model X means Tesla doesn’t have a lower-priced crossover to compete with the Jaguar I-Pace, which starts at $70,525.

The timing of the announcement is also unusual. As of January 1, Tesla electric cars are only eligible for half of the $7,500 federal tax credit. That’s because Tesla reached the 200,000-unit cap for the full credit in the middle of last year. The credit will be halved again in the middle of 2019, before disappearing altogether at the end of the year. Tesla is cutting prices by $2,000 to help compensate, and cars may still qualify for state and local incentives. General Motors may be in the same boat, but it’s only current all-electric car is the Chevrolet Bolt EV, which starts at $37,495.

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