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Tesla is bringing back the lower-priced Model S — here's why

Tesla is reversing course and resuming sales of a lower-priced Model S that will have a smaller battery

The automaker is bringing back the 60 kWh Model S with a base price of $66,000 before federal and state tax incentives. That price is almost $4,000 below the base price of 60 kWh Model S sold between 2012 and 2015.

Unlike the previous version of the small battery Model S, this one comes with a unique feature Tesla believes will make it more attractive. The electric car will actually have a 75 kWh battery pack, so customers who want more range can pay for a software update that will unlock more power in the battery pack. The price of that software update has not been announced.

So why is Tesla bringing back a lower-priced Model S?

The company says it's responding to customer demand.

"We've heard from a number of people who would like to buy a Model S, but can more easily afford it only at a lower price point," said Tesla spokesperson Alexis Georgeson.

That's a change from last year, when Tesla stopped offering a 60 kWh Model S, in part because sales of the smaller battery car were limited. At the time, some analysts estimated just 10 percent of the Model S sedans sold had the smaller battery pack.

With an estimated range of at least 200 miles, the new 60 kWh Model S comes at a time when Tesla is rapidly expanding production. Last year, Tesla sold just over 50,000 vehicles and set a target of delivering at least 80,000 vehicles this year. By 2018, Tesla expects to build 500,000 annually, with most of those being the Model 3, which is set to go on sale late next year with a base price of $35,000.

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