Tesla is increasing the base price of the Model S by $2,000, source says

Over the 4 years that Tesla has been selling the Model S, the price range of the vehicle has changed significantly. The higher end keeps going up with better performance versions, but the base models have also changed a lot after Tesla cancelled the 40 kWh version.

Now a reliable source told us that Tesla is planning to soon increase the base price of the Model S by $2,000.

The Model S currently starts at $66,000 so we are only talking about a 3% increase in price, but it’s still significant.

The tip is coming from the reliable ‘ElonsVelvetJacket’, who has provided us with reliable scoops in the past, but he couldn’t tell us the reason for the price increase which should happen on November 22.

We reached out to Tesla for a comment on the alleged increase, but representatives didn’t immediately reply.

It’s important to note that the increase is for the base version of the vehicle with software-locked battery packs – meaning that Tesla is selling 75 kWh battery packs locked at 60 kWh energy capacity.

Despite shipping 75 kWh while customers pay for 60, Tesla is still making money and reported a record total automotive gross margin of 29.4% last quarter. Though Tesla also acknowledged that the introduction of the Model S 60 resulted in an average price decrease during the last quarter:

“Model S average prices decreased 6.5% sequentially, primarily due to the introduction of the 60 kWh models and production of the 100 kWh variants only starting late in Q3, which would otherwise have balanced that out.”

But if the price increase starts for new orders on November 22, it will likely not have a strong impact on the fourth quarter.

Tesla also recently included its new Autopilot hardware suite in all vehicles and it is betting on people buying the ‘Enhanced Autopilot’ and ‘Full Self-Driving Capacity’ options to pay for the hardware. The people most likely not to order the options are those buying the base versions and Tesla might be looking at compensating by increasing the base price.

What do you think? Let us know in the comment section below.