Tesla Motors (TSLA) is bringing all-wheel drive and automated driver assists to its Model S, a move that gives the electric sedan more firepower against luxury competitors.
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Chief Executive Elon Musk ignited speculation last week when he said Tesla would “unveil the D and something else.” Industry analysts expected Tesla to give the Model S all-wheel drive, which provides better traction on slippery roads.
The upgrades mark the first major change to the Model S since it launched more than two years ago.
At a Thursday night event in Hawthorne, Calif., Musk revealed the "D" stands for dual motors that send power to the front and rear wheels. Tesla was able to give the Model S all-wheel drive while increasing its electric range and acceleration, Musk said.
All-wheel drive will be available starting in February as a $4,000 option. Tesla’s base Model S starts at $71,000 after $7,500 in federal tax incentives.
Karl Brauer, senior analyst at Kelley Blue Book, said Tesla must include all-wheel drive on the upcoming Model X in order for the sport-utility vehicle to be competitive. So it was a logical move to retrofit the technology in the Model S.
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“All-wheel drive may not be purely necessary, but it gives people confidence in bad weather,” Brauer added.
Tesla’s driver assists -- similar to those offered by rival automakers -- will be offered in an “Autopilot” and technology package that costs $4,250. Musk stressed that Tesla’s Autopilot features don’t allow for fully autonomous driving, saying drivers can’t take their eyes off the road.
Included in the Autopilot package is automatic braking, which is activated when the car recognizes obstacles on the road. Tesla also said the upgraded Model S can park itself in a garage, stay in its lane and automatically change lanes when the driver uses the turn signal.
Autopilot uses a combination of cameras, sensors and radar to monitor the surrounding roadway, according to Tesla.
“We’re going to see this autonomous vehicle technology keep moving forward,” Brauer said. “I think it will be another sub-race in the automotive evolution over the next few years, similar to the alternative energy race.”
Tesla also unveiled the P85, a new performance version of the Model S that adds horsepower and sporty features like Brembo brakes.
The P85 equipped with all-wheel drive, the P85D, is rated at 691 horsepower and can travel from zero to 60 miles per hour in a brisk 3.2 seconds. It has a starting price of $112,670 with the tax breaks. Tesla said it will begin deliveries of the P85 and P85D in December.
The launch of all-wheel drive and hands-free driving features brings the Model S up to speed with Mercedes-Benz, BMW and other premium automakers.
All-wheel drive often comes standard on luxury sedans. Collision prevention and other driver assists are becoming more common as well. They can even be found in less expensive vehicles from the likes of General Motors (GM), Ford Motor Co. (F) and Toyota (TM).
Tesla’s announcement seemed to fall flat on Wall Street. Shares dropped 6% to $241.73 in recent trading. Tesla has retreated about 14% over the last month.
While Tesla is now in a better position against rivals in its price range, Brauer said the Model S changes were critical “because much of the competition already had these features.”
“When they look at what Elon Musk introduced last night, [Tesla] just caught up to a lot of other vehicles,” he explained.
U.S. demand for the Model S has lost some momentum this year. Based on figures compiled by Autodata, sales were down 3.2% to 13,850 units through September.
Tesla currently sells two types of the Model S. The base model has a 60 kilowatt-hour battery, and the other is equipped with an 85 kWh battery.
Tesla’s upgrades may reinvigorate the Model S ahead of the expected spring debut of the Model X crossover. The Palo Alto, Calif.-based manufacturer also has a mainstream sedan in the works, although the $35,000 Model 3 isn’t scheduled to launch until 2017.
“It keeps Tesla in the game so to speak,” Brauer said of the Model S upgrades.
Tesla hopes to cut down on production costs with its so-called Gigafactory. The $5 billion plant, which Tesla plans to build in Nevada, is slated to begin operations in 2017. The company has said the Gigafactory will lower the cost of lithium-ion batteries used in Tesla vehicles.