Automotive Retail

Tesla's improved battery is incremental for sales, says Kelley Blue Blook editor

Will Tesla's upgraded battery pack help sell more cars?
Will Tesla's upgraded battery pack help sell more cars?

The new Tesla battery pack is unlikely to boost sales much, when existing drivers are being charged $20,000 for the upgrade, a Kelley Blue Book expert told CNBC.

Tesla announced new versions of its Model S sedan and Model X crossover on Tuesday, with substantially faster acceleration and an improved battery range.

The new Model S P100D with Tesla's speed option upgrade, called Ludicrous mode, has a more powerful 100 kilowatt-hour battery with a 315-mile battery range, while the new Model X P100D with Ludicrous mode will get an improved range of 289 miles.

The Model S P100D will start at $134,500 and the Model X 100D will start at $135,500, but owners of earlier models will be able to buy the better specs for $20,000, while those who currently have a vehicle on order will pay $10,000.

Karl Brauer, senior editor at Kelley Blue Book, pointed out that $20,000 cost to existing Telsa customers could cover the cost of a whole new car in the U.S. Kelley Blue Book is an influential U.S. vehicle valuation and automotive research company.

"It's an impressive acceleration and range number [but] it doesn't apply to most Americans out there," Brauer said, adding that there were many cars available in the $20,000-$25,000 price range.

Alexis Georgeson | Tesla

Tesla CEO Elon Musk said production volume of the new batteries would be around 200 packs a week. The company also acknowledged in a blog post that the updated vehicles, while expensive, would "help pay for the smaller and much more affordable Tesla Model 3 that's in development."

"This isn't going to be big shift in sales but huge additional increase in productivity capability," Brauer told CNBC's "Squawk Box".

"If [Musk] thinks he can sell incrementally more cars with incrementally better range and power, then that's an incremental improvement for the company," he added. "I think Tesla needs more than an incremental improvement these days."

Instead, what Tesla needed to do, Brauer said, was to produce a volume vehicle like the Model 3 at an affordable price, with improved battery packs, that appealed to a broader range of buyers.

"If he can improve these energy densities and further range into that car, that's where we'll see a real benefit," he said.

As for Tesla's May announcement of its new target of building a 500,000 vehicles a year by 2018, the analyst was skeptical.

"It's really hard to conceive them hitting those kind of numbers in that kind of time frame...It's unprecedented even by modern standards and Elon's aspirations," said Brauer, who added that Tesla was more likely going to hit a production of "a few hundred thousand" by 2018.

- Robert Ferris contributed to this report.

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