Newly built “Long Range” versions of the Model S sedan and Model X SUV, which both start around $90,000 before savings, will be able to Travel 370 miles and 325 miles, respectively, without stopping for a battery charge. That’s about a 10% boost.
The cars will get some hardware updates that will also improve “acceleration, and ride comfort,” Tesla (TSLA) said in a blog post. The upgrades could help lure customers to Tesla’s more expensive offerings now that the cheaper Model 3, which starts around $35,000, is on the market, said Karl Brauer, executive publisher at Autotrader and Kelley Blue Book.
“It’s a way to keep those vehicles relevant,” Brauer told CNN Business. “And since the Model S and Model X have been in production longer, they probably have a lot higher profit margins built in” — which means Tesla is probably eager to sell more of them.
Tesla earlier this month reported a large drop off in sales of its luxury models. Even sales of the Model 3, which has enjoyed broad popularity since its debut, were on the decline.
A large portion of the apparent slowdown in Model 3 sales could be attributed to logistics. The company has had trouble sorting out its system to ship cars abroad, and Brauer said the sales figures “will smooth out over time.”
But Tesla has “a lot of things working against them” right now, Brauer said. A $7,500 federal tax credit was cut in half for all Tesla models at the beginning of the year. It will be cut in half again this summer. That essentially made all Tesla cars more expensive for American consumers.
Its competitors, meanwhile will still be able to use the full $7,500 tax credit until they sell their 200,000th electric vehicle. And there are a few long-range electric vehicles about the enter the market that could give Tesla meaningful competition for the first time in the company’s history, Brauer said.
Brands like Porsche, Audi, Mercedes are all planning to make EVs that could compete directly with the Model S and X. Meanwhile Hyundai’s Kona electric SUV, which starts at about $37,000, could take a chunk of the Model 3’s market.
Tesla will report its first-quarter earnings results later Wednesday. After back-to-back quarters in which Tesla posted a profit, the company is expected to be back in the red.