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Why Tesla is getting rid of its cheapest model

This article was sourced from Market Watch. Article by Claudia Assis.

Tesla Inc. announced late Friday night that it is killing off the cheapest models of its Model S sedan. The news comes ahead of the launching of the Model 3, the sedan the company aims to sell to the masses.

Customers who want to own a Model S 60 and 60D, which sport a 60 kWh battery, will have until April 16 to order one, Tesla TSLA, +0.16%  said.

These are the cheapest Teslas currently available, starting at $68,000 before destination and document fees for the Model S 60, and $73,000 for the Model S 60D, which is all-wheel drive and has slightly longer battery range.

Tesla hopes to start selling the Model 3, an all-electric sedan expected to cost around $35,000, later this year, with limited production starting in July.

The company last week raised $250 million in common shares and $850 million in convertible notes to help cushion the Model 3 launch. The capital raise was widely expected, with the deal on the low end of Wall Street expectations.

Tesla ModelBattery rangeTop SpeedBase price
Model 3215 miles?Estimated at $35,000
Model S 60210 miles130 mph$68,000
Model S 60D218 miles130 mph$73,000
Model S 75249 miles140 mph$74,500
Model S 75D259 miles140 mph$79,500
Model S 90D294 miles155 mph$89,500
Model S 100D335 miles155 mph$92,500
Model S P100D315 miles155 mph$134,500
Model X 75D237 miles130 mph$85,500
Model X 90D257 miles155 mph$95,500
Model X 100D295 miles155 mph$98,500
Model X P100D289 miles155 mph$135,500

Some analysts deemed the smaller deal a sign of confidence in the Model 3 rollout, while others were still concerned about Tesla’s spending and whether the company would have to tap the capital markets again if the vehicle launch doesn’t go as planned.

The Model 3 is a key element in the company’s expansion goals, which include ramping up its production to a rate of half a million vehicles by the end of next year.

The company introduced the Model S 60 and 60D models “as a more affordable option to accelerate the adoption of electric vehicles,” the company said in a statement about the soon-to-be discontinued models. Most customers ended up going for pricier Model S options, however, so Tesla is removing the 60 kWh versions from its lineup to “simplify the ordering process for our customers.”

After April 16, the cheapest Tesla available to order will be the Model S 75, with a 75 kWh battery, with a $74,500 base price. That Model S with all-wheel drive, the 75D, starts at $79,500.

The cheapest Model X, the full-size SUV Tesla launched in 2015, starts at $85,500.

The Model X P100D, a 100 kWh-battery model with a range of 289 miles between charges, is the most expensive vehicle in the Tesla lineup, starting at $135,500 and quickly zooming past $150,000 with accessories such as enhanced Autopilot, Tesla’s suite of advanced driver assistance systems, an upgrade for its charger, and others.

Tesla shares are on track to gain more than 5% this month, compared with gains under 1% for the S&P 500 index SPX, -0.20% The stock has risen more than 12% in the past 12 months, to gains around 16% for the benchmark.

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BCR team
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