Truth to Power: Tesla Flips The Switch

Quartz: “In 2016, Tesla sold two different versions of their Model S and X electric cars. One version had a 60 kilowatt per hour battery, and another a 75. The 75-kilowatt version cost $9,000 more. Prior to Irma’s landfall, Tesla announced that it would flip the proverbial switch, and allow the 60-kilowatt cars to become 75-kilowatt cars. This enabled the 60-kilowatt vehicles to go 230 miles per charge, rather than 200 … Tesla was able to upgrade the kilowattage in the cheaper version of the car because both models actually have the same 75-kilowatt battery. The company just chooses to limit the capacity in some cars so they can have two different price points.”

“The response to Tesla’s decision has been mixed. While some observers congratulated the company for proactively reacting to the impending storm, others were disturbed by the revelation that the company could so easily increase the capacity on their cars. If the battery could be more powerful without any extra cost to Tesla, ask critics, why deny this capability to certain drivers?”

“The answer: Limiting battery capacity actually makes Teslas more affordable. The extra $9,000 that Tesla gets from its less price-sensitive customers is what allows it to charge a lower price for the lesser version of the car, the one that more cost-conscious consumers might purchase (though of course anyone purchasing a $60,000 Tesla is not poor). Perverse as it may seem, having a version of the car that gets less mileage actually makes it more accessible.”

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