Tesla Model S Ditches 75 kWh Battery Option For An Effective $18,000 Price Hike

Tesla has been making some changes to its pricing strategy over the past week, and the biggest change in quite some time comes today with the premium-market Model S and Model X. CEO Elon Musk took to Twitter to announce that the 75 kWh battery pack for both electric vehicles will be discontinued and that customers only have until Sunday night to place orders for vehicles with that battery option.

For those that don't keep up with all things Tesla, the Model S 75D with the 75 kWh battery has a base price of $76,000 and can travel up to 259 miles with a full charge. The heavier $82,000 Model X 75D with the 75 kWh battery can travel up to 237 miles per charge.

By discontinuing these models, the effective base prices for the vehicles rises to $94,000 and $97,000 respectively as both feature a larger 100 kWh battery pack. That more capacious battery also means that overall range extends to 335 miles and 295 miles respectively for the Model S and Model X.

There could be a couple of reasons for quick changeup, with one being product differentiation. The Model 3 currently has a base price of $44,000 (before $3,750 federal tax credit) and can creep up to $70,500 for a fully loaded Performance edition with Autopilot. This move puts a little more breathing room between the Model S and the Model 3 on the pricing front, as the Model 3 Performance has both a longer range and is faster than the current entry-level Model S.

The same theory could also be applied to the Model X, which will soon be joined by a smaller Model Y crossover based loosely on the Model 3 chassis. The Model Y is expected to have a starting price that is a few thousand dollars more than the Model 3.

One alternative possibility is that Tesla is simply switching over from the 18650 Panasonic battery cells that it uses in the Model S and Model X to the newer 2170 design used in the Model 3. This would lead to a more efficient pack overall that would support a higher charging rate. Tesla could be taking its 75 kWh battery production offline as it ramps up for a replacement using the newer battery cells. And if that's the case, there's the inevitable conclusion that the 100 kWh battery could give way to an even larger pack with greater range (also using the new Panasonic cell design) -- perhaps in the 400+ mile range.

The upcoming second-generation Tesla Roadster will have a 200 kWh battery that will give the sports car a range of up to 620 miles. 

Last week, Tesla announced that it was reducing the prices of its vehicles by $2,000 across the boardin order to partially offset the fact that the federal tax credit of $7,500 has been whittled down to $3,750 starting January 1.