How Tesla managed to lower the price of its Model S without changing anything (or almost)
The new Tesla Model S and Model X Standard Autonomy offered for order are only an optical illusion, since they are in all respects identical to the Long Autonomy version. Finally, in terms of hardware. Because the software is itself restricted, to limit the use of the battery. Let’s come back to this peculiarity of Tesla, and try to imagine a future the manufacturer offers even more subscriptions.
You have undoubtedly heard of it: a new Tesla Model S is available for order across the Atlantic. Finally, it has new only the name (Standard Autonomy), since nothing at all has changed compared to that which we know under the name Grande Autonomie.
Indeed, Tesla has simply artificially limited the capacity of the vehicle’s battery, so that the autonomy is reduced. We’ve talked about that in more detail in this article, if you want to refresh your memory on how Tesla does to keep costs down.
An increasingly à la carte car
If Tesla is increasingly starting to offer a car that is identical from the factory, but which can be differentiated from other models by certain software options, this is nothing new in the automotive world.
Indeed, BMW practices this method in particular, where they go so far as to offer heated seats against around twenty euros per month. If you do not pay, the seats cannot be heated, even though the equipment is already installed. Tesla has somewhat imitated the German manufacturer, allowing the first Tesla Model 3 equipped with heated rear seats to activate them for several hundred euros. But it was above all a method to reduce production costs when it was launched.
If this method can sometimes make sense for the consumer – for example to stay below the threshold of the ecological bonus in purchase price -, the big winner remains the manufacturer. Indeed, by leaving the factory only one type of vehicle, and not multiple variants, the tools are shared as much as possible.
Creating a new production line or modifying an existing line to build a Tesla Model S with a smaller battery involves sourcing batteries of a different capacity, potentially from another supplier, then testing those batteries, integrating them into the vehicle , have them approved, and take the risk of delaying the release of the finished product.
Instead, Tesla chooses a method already proven in the past on some cars, namely to put the same battery as their big sisters, but to bluff the on-board software so that it only sees part of this battery. Previously, Tesla Model S software limited in this way could be legally unlocked at a cost of between 10,000 and 15,000 euros.
In this case, a Tesla Model S or Model X Autonomy Standard today costs $10,000 less than a Long Autonomy version, and one can easily imagine that if Tesla allows the remaining autonomy to be unlocked in a few years , you will have to pay around 10,000 dollars to take advantage of it. However, we are going to look at another way of seeing things, with one-time subscriptions allowing you to take advantage of its entire battery.
Subscriptions that can be very useful… or not
Tesla currently offers several subscriptions that do not require any additional equipment on its vehicles. Premium connectivity at 9.99 euros per month, or Fully Autonomous Driving Capability (FSD) which is available in the United States against 199 dollars monthly. We could imagine a new way to raise money for Tesla, and which would particularly concern the new Tesla Model S and Model X Autonomy Standard.
This would be for Tesla to offer its customers with a Tesla Model S or Model X Standard Autonomy to periodically unlock the entire battery, for a price to be determined. For example, it’s a safe bet that people leaving for road trip for a few days would have an easier time pay 200 euros to have 20% more autonomy for one monththan paying 10,000 euros to have this maximum autonomy for life.
However, as a software-limited Tesla Standard Autonomy indeed has the same battery as the Long Autonomy version, it must benefit from the same charging curve as well. In practice, we can therefore expect a standard version to reach 100% battery in as much time as the Long Autonomy version reaches 80%where then the charging power is significantly reduced.
This would then mean that during long trips, the Long Autonomy version would only have a small advantage: that during the first stretch of road after the start. It could theoretically travel more distance with the initial 100% charge, but if then each fast charge follows the usual logic, it will stop around 80% since that is enough to continue the journey.
On the other hand, the software-limited autonomy version could charge at each stop up to 100%, since it would have the same recharging power up to 100% as the Long Autonomy version up to 80 %. In practice, we would then end up with all the advantages of a Long Range version in terms of charging power, without the disadvantages of a version with a smaller battery (which would take longer to load to 100%).
Why Tesla will not generalize this practice
In the end, if Tesla could offer for each vehicle they have in the catalog a software version limited in battery capacity, it would rather be great news for buyers. As we have seen, if the charging curve is the same as the version which is not limited, the road trips will not really be longer, and the savings made on purchase would be quite significant. This shows once again that a large battery in an electric car is not necessary, but that everything lies in the combo between fast charging and consumption.
The future will tell if Tesla extends these possibilities to other vehicles rather than modifying its production lines, but if the manufacturer were to replace the Tesla Model 3 or Model Y Propulsion with versions having the same battery as the Grande Autonomy, simply limited to 80% of their capacity, it could be a real revolution.
Instead, imagine a Tesla Model 3 at 10,000 euros less than the Grande Autonomie, or 39,990 euros and with 480 kilometers of WLTP autonomy. On paper, it would be 2,000 euros less than the current Tesla Model 3 Propulsion, for ten kilometers of lost autonomy.
However, this Tesla Model 3 would be the holy grail of the electric sedan, since it would not only charge at 250 kW maximum, but would arrive at 100% in less than 30 minutes! For long trips, it would then be unbeatable in its category, and would overshadow the Tesla Model 3 Grande Autonomie which would lose its interest.
This is probably the reason why Tesla does not venture on it, the game is not worth the candle. Especially since limiting the capacity of a battery does not reduce its manufacturing cost. And when we know that a battery sometimes represents 40% of the price of a car, we understand a little better why manufacturers avoid the practice of clamping.
However, for Model S and X whose sales figures sometimes need a boost, this is probably the best way to go. We can imagine that the margin is higher on these models than on the more affordable Model 3 and Model Y.
