Tesla upgrades the Model S

Tesla Model S upgrades range and more
Tesla Model S upgrades range and more   

Tesla is upgrading its Model S in the latest move to make the high-end sedan stand out in an increasingly competitive luxury car market.

The company is discontinuing production of the entry level edition of the rear wheel drive Model S with a 60 kWh battery pack and a range of 208 miles.

The new base level Model S will be called the 70D.

It will feature a larger battery pack of 70 kWh with a greater range of 240 miles. The 70D will also be an all-wheel drive Model S thanks to dual motors.

With a starting price of $74,900, the 70D will cost roughly $5,000 more than the previous base version of the Model S.

Tesla gives sedan a big upgrade
Tesla gives sedan a big upgrade   

Why is Tesla upgrading the entry level Model S?

One factor is Tesla can incorporate technology it already offers in higher-end versions of the Model S so the production cost increases are limited.

Read MoreTesla looking 'like other car companies': Cramer

At the same time, Tesla can offer features that will help the basic edition of the Model S stand out in the increasingly competitive luxury car market.

For example, the Model S 70D will come with SuperCharger and auto pilot hardware. Adding auto pilot software will cost buyers of the 70D another $2,000.

Tesla CEO Elon Musk says the company will offer auto pilot technology later this year allowing Tesla owners the chance to drive on the highway with their vehicles, not the drivers, controlling the steering and acceleration.

It's still unclear if state or U.S. regulators will allow semi-autonomous vehicles on highways.

One feature the new Model S 70D will not have is the "insane mode" that allows drivers of the Model S P85D ultra-fast acceleration.

After delivering 10,030 vehicles in the first quarter, Tesla is targeting sales of 55,000 vehicles this year. That will include the company's first crossover utility vehicle, the Model X. Deliveries of the Model X are expected to start sometime in the third quarter with sales ramping up in the fourth quarter.

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