Tech

Tesla cuts prices on top-selling Model 3 while discontinuing versions of other cars

Key Points
  • Tesla is cutting the price of its Model 3 car and eliminating the base versions of the Model S and Model X.
  • The company is also raising the price of full self-driving by $1,000, underscoring CEO Elon Musk's promise that the feature would become more expensive over time.
  • It comes as Tesla produced a record number of vehicles in the most recent quarter.
Elon Musk, co-founder and chief executive officer of Tesla Motors.
Yuriko Nakao | Bloomberg | Getty Images

Tesla is cutting the price of the Model 3, as it aims to make its best-selling product more affordable, and is discontinuing versions of other vehicles.

Tesla said on Monday that it's reducing the price of the Model 3 by $1,000 to $38,990. The company will no longer sell the standard range versions of the Model S and Model X, raising the minimum costs consumers will have to pay for those cars.

The base version of the Model S is rising to $79,990 from $75,000, while the price of the Model X is increasing to $84,990 from $81,000.

"In order to make purchasing our vehicles even simpler, we are standardizing our global vehicle lineup and streamlining the number of trim packages offered for Model S, Model X and Model 3," a Tesla spokesperson told CNBC. "We are also adjusting our pricing in order to continue to improve affordability for customers. Like other car companies, we periodically adjust pricing and available options."

The changes come ahead of Tesla's second-quarter earnings next week. In its last report, Tesla recorded a wider-than-expected loss and less revenue than expected as demand for its cars waned following the loss of a valuable tax credit for buyers.

As part of the update, Tesla is bundling its high-performance "ludicrous mode" into the price of the Model S Performance and Model X Performance variants. Ludicrous mode previously cost buyers an additional $20,000.

Additionally, CEO Elon Musk tweeted Tuesday that the price of a Tesla with full self-driving capabilities will increase by $1,000 starting Aug. 16.

"As mentioned earlier this year, cost of the Tesla FSD option will increase every few months," Musk wrote. "Those who buy it earlier will see the benefit."

In April, Musk said the cost of full self-driving functionality would "increase substantially over time."

Tesla's cars aren't yet capable of full autonomy, and Musk has said he expects the full set of features to be ready within the next two years.

However, Musk has remained ambitious about Tesla's plans for self-driving cars, telling investors in a recent call that autonomous driving stands to help the company achieve a $500 billion market cap. Tesla is currently valued at $44.6 billion.

Tesla produced a record 87,048 vehicles during the quarter that ended June 30. Deliveries rose modestly from the previous quarter to 95,200 vehicles.

WATCH: Tesla workers say they use shortcuts to meet Model 3 production goals

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Tesla workers say they use shortcuts to meet Model 3 production goals