I’m not saying Tesla created a standard range version of its Model S and Model X and launched it yesterday to distract from CEO Elon Musk’s cringeworthy attempt to fight Mark Zuckerburg, mostly because Elon Musk seems impervious to embarrassment, but it’s nice timing. Whatever the reason, the announcement of a cheaper Model S and Model X is good news for consumers and probably bad news for competing automakers.
While we’re at it, Lexus has a fancy version of its LC500, President Joe Biden makes a rare comment on the United Auto Workers contract negotiations, and U.S. Steel may have a new buyer.
The Tesla Model S and Model X Standard Range Are Cheaper… For Reasons
Tesla did its favorite thing, which is to announce news quietly overnight so that all of us can scramble to pull stories together. Honestly, as a newsman, it’s kind of fun. Who needs embargoes when you can just update your website and wait for Tesla watchers to notice?
Yesterday. Tesla modified its website to show a new ‘Standard Range’ trim level for Model S and Model X. For the Model S you get a vehicle capable of going a pretty good 320 miles on a charge for a price of $78,490, or exactly $10,000 off the old base Model S, which gets 405 miles of range. For the Model X, the same price drop gets you a $10,000 discount as well, dropping the price to $88,490. That gets you a less-good range of 269 miles. It’s unclear if the vehicles get a 100 kWh battery that’s been downgraded, a smaller battery, or if Tesla is swapping in a cheaper, lower-range LFP battery.
Why did they do this? Reasons abound. The company could have been doing it to distract from Musk’s weird Zuckerburg fight threats, but I doubt it. Reuters says this is the company “looking to increase sales as high borrowing costs hamper demand for expensive electric vehicles,” adding:
The Austin, Texas-based company has also offered other incentives to reduce inventory in a strategy that CEO Elon Musk said was part of Tesla’s recession playbook.
That’s probably true. Financing a $90,000 car with these higher rates is not fun, especially when you can get a Model Y for under $40k with over 300 miles of range. It’s not as nice as the Model S, but it’s also not as old.
Some of this feels also like a continuation of Tesla’s ongoing price war. This new sub-$80,000 Tesla Model S compares favorably to the $105,540 you’d spend for a Mercedes EQS 450+ that gets 350 miles of range or a base Taycan, which, for $90k delivers an EPA-estimated range under 220 miles. The Model X isn’t as good a deal, because $87,100 buys a BMW iX that goes over 300 miles and is a much newer (and arguably better) car.
It’ll be interesting to see if the LFP battery is actually being swapped in, because that would make for an attractive vehicle.
Biden Weighs In On UAW/Big Three Negotiations
In new statement, POTUS calls for “all sides to work together to forge a fair agreement” in UAW-Detroit 3 contract talks. “The UAW deserves a contract that sustains the middle class.” pic.twitter.com/lShvsse9in— Riley Beggin (@rbeggin) August 14, 2023
Generally speaking, Presidents of the United States of America (not to be confused with The Presidents of the United States of America) do not weigh in on ongoing labor negotiations directly. The band probably does. As The Detroit News points out:
Presidential administrations have used economic spokespersons to comment on the potential economic impacts of bargaining, said Marick Masters, a labor expert and business professor at Wayne State University. But it’s uncommon for a president to weigh in on negotiations directly, “preferring instead to let the process work its will.”
- EVs probably require fewer workers to create
- Tooling up for EVs is going to be expensive
- The Big Three are unionized, their competitors are not
- The union gave a ton of concessions to automakers during the Great Recession and hasn’t gotten most of them back
- The current contract still has a two-tier wage structure, which most unions are trying to do away with
- The new union leadership has promised no sweetheart deals
- The generally reliably Democratic-supporting UAW has not officially endorsed Biden yet, on purpose because of all the stuff going on right now
In the face of all that, Biden says he wants to make his intentions clear, stating:
I support a fair transition to a clean energy future. That means ensuring that Big Three auto jobs are good jobs that can support a family; that auto companies should honor the right to organize; take every possible step to avoid painful plant closings; and ensure that when transitions are needed, the transitions are fair and look to retool, reboot, and rehire in the same factories and communities at comparable wages, while giving existing workers the first shot to fill those jobs. The UAW helped create the American middle class and as we move forward in this transition to new technologies, the UAW deserves a contract that sustains the middle class.
That’s definitely a statement, but there’s nothing here particularly outrageous from the perspective of the mainstream Democratic view of labor. I think that’s about as far as Biden can reasonably go without rocking the boat too much.
U.S. Steel Might Get A New Owner
We’ve known for a while that U.S. Steel, one of the oldest and biggest producers of steel for the automotive industry, has been for sale. The expected buyers were expected to come forward and then, all of a sudden, a new challenger emerged.
Bloomberg has a play-by-play of all of the drama, which started with a big offer from rival Cleveland-Cliffs Inc.:
Here’s my favorite part of the story:
Commenting on the announcement, a U.S. Steel spokesperson said it was the first that the company had heard from Esmark. “We welcome them to join the multiple parties already in our previously announced strategic alternatives process.”
Bouchard said that his offer was motivated by a desire to ensure U.S. Steel remained American owned after the weekend’s announcements.
“They’ve made huge strides, but we have a lot of work to do and we can make U.S. Steel U.S. Steel again,” he said. “This needs to stay an American institution.”
What a fun bit of news if you are a U.S. Steel executive or shareholder. I’m assuming the swipe about “stay an American institution” is a reference to Cleveland-Cliffs, which is owned by various stakeholders in different parts of the world (the largest shareholder seems to be in Luxemborg), though it’s possible there are some Chinese or other firms in the mix as well.
Check Out This Fancy LC500
I’ve got a review of the new 2024 Lexus LC500 with the V8 coming out but, it’s not a secret: I think the thing is great. It’s also something I assume Lexus could never build a new generation of, so it’s good news they’re adding variants to the existing model.
The 2024 Lexus LC500 Inspiration Series is a V8 LC500 with some aerodynamic improvements, mostly notably the front bumper canards and a (coupe-only) carbon-fiber fixed rear wing. The $116,700 price for the coupe is high, but they’re only making 125 of these things, so act fast.
The Big Question
You’ve got $90,000 to spend on one electric vehicle. What are you buying?
Photos: Tesla, US Steel, Lexus
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