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Tesla’s Standard Range strategy for Model S, X puts pressure on Lucid
Tesla’s Standard Range strategy with its flagship Model S and Model X is going to put pressure on the automakers that are emphasizing performance with their vehicles, especially Lucid Group, which has targeted Tesla’s two luxury vehicles with its lineup of Air sedan configurations.
Last night, Tesla officially added Standard Range versions of the S and X to its Design Studio, offering its luxury, high-performance vehicles to customers for a hefty discount. The performance metrics remained the same, the only difference was a reduction in range — 310 miles for the Model S, and 269 miles for the Model X.
Tesla Model S and Model X now more affordable with Standard Range variants
These two new configuration options from Tesla will have those on the ropes between Elon Musk’s company and Lucid, run by former Model S team member Peter Rawlinson, at a crossroads. However, the decision may be easier than ever before.
But the consequences Lucid might feel from Tesla’s new, cheaper configurations are more explicit than ever before. Tesla’s Long Range and Plaid configurations of the S and X were priced relatively similar to Lucid’s top-of-the-line offerings in the Air sedan.
The Model S Plaid comes in at $108,490 before options, and the Lucid Air Grand Touring, the most comparable to the Model S Plaid (within the same price range), is $125,600.
The Model S Plaid has a 1.99-second 0-60 MPH rate, while Lucid’s Air GT will get you there in 2.6 seconds. It trumps the Model S in range, offering 516 miles, while Tesla’s option is still nothing to bat an eye at, with 396 miles.
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But now, pricing comes into focus, and undercutting the Air’s Pure configuration that starts at $82,400 by pricing a new Model S at $78,490 may make things a little easier for consumers and a little more difficult for Lucid.
Lucid missed consensus estimates on vehicle deliveries in Q2, as 1,404 cars made their way to customers. FactSet expected 2,000 cars, and struggling with demand, the last thing it needed was an automaker like Tesla to undercut its products with something superior for less money.
In terms of range, the Air is the best that you can get. But it is about more than that, including the vehicle’s ability to function as a daily driver. Lucid customers have reported issues with software in their vehicles, and as it has been a pain point for many automakers in the early development of EVs, it is something people just don’t want to deal with.
Tesla has its own issues, of course. People have recently come forth with claims that their cars get significantly lower range than they are rated for, and, depending on the person, Elon Musk is a touchy subject.
However, some people don’t give a damn about what the CEO does, they just want a car that works well and is priced reasonably. Lucid may have taken a drastic step back with Tesla’s new Model S and Model X trims. Pressure is being applied to rivals of Tesla through the company’s various price cuts in nearly every market.
In the U.S., Tesla put everyone in the hot seat early this year with massive price cuts, and it was up to the manufacturers to play ball or take their chances. Ford followed with price cuts of its own, and Lucid did, too.
Lucid introduces new $7,500 discount as EV price war heats up
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However, their strategy did not translate to an overwhelming number of sales, and Lucid cut its delivery expectations to just 10,000 units in Q1, despite having over 28,000 reservations for its cars.
Tesla’s new rollout could be a true gut punch to Lucid as its Model S and Model X Standard Range offerings will give consumers one more reason to pick the unequivocal leader in EVs.
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In a new note to investors on Tuesday, Morgan Stanley analyst Andrew Percoco said that Tesla has one big financial question to answer for investors regarding its Robotaxi rollout, Full Self-Driving software, and Optimus.
Percoco said in the note that, for the most part, investors are still very positive about the direction the company is headed. However, there are some things the firm would like to see, and they have to do with financials.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla bulls are more than convinced that the company’s Full Self-Driving software is proof it can develop physical AI. Financially, however, there are still some questions, especially on elevated spending, which CEO Elon Musk said would occur as the company works to roll out Robotaxi faster and continue developing its Optimus robot.
The latter two are where Tesla will have to prove progress to investors, as Percoco writes that both projects “will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof points to support the ROI on elevated capex.”
Percoco said the second quarter earnings call did not change his long-term thesis of where Tesla is positioned in the AI race, which is out in front. However, there are concerns that weaker gross margins and higher R&D spend will stress financials, and that has “sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus.”
Additionally, Robotaxi still needs to be proven with more operation in existing cities while maintaining safety but improving how many rides it gives in any given time, he said. For Optimus, Percoco wrote that he is “still looking for evidence beyond commentary around SOP.”
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Morgan Stanley put Percoco in charge of covering Tesla after long-time analyst Adam Jonas transitioned to the automotive side.
Currently, Morgan Stanley has a $415 price target on Tesla and a ‘Hold’ rating on the stock. It is trading at around $330 at the time of publication, which was 2:30 P.M. on the East Coast.
SpaceX’s massive investment in AI will make it a big winner, Argus Research said after the company’s successful earnings call last week.
The firm also upgraded shares to a Buy from Hold and set a $160 price target.
SpaceX (NASDAQ: SPCX) is currently recovering from its heavy AI infrastructure investments, as it spent nearly $16 billion in Q2 alone. The company did this primarily by monetizing high-demand GPU compute capacity at a much faster pace than traditional data center economics would suggest.
Company CFO Bret Johnsen said that SpaceX would be able to pay back anything on new deployments within a year.
There are plenty of ways the company can do this:
Leasing excess compute capacity through contracts
SpaceX has already built Colossus and Colossus II, largely for its own model training. However, much of that capacity is already rented out to third parties. It already has major deals with Anthropic, Google, and Reflection AI. These partnerships are adding billions per month to SpaceX’s spreadsheet.
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High utilization driven by industry-wide scarcity
The demand for advanced AI training and inference capacity continues to exceed what is available for use. SpaceX can fill new racks quickly after they come online, so the capital deployed converts into revenue with minimal idle time.
Additionally, management and outside observers have described the new compute capital as behaving more like a cost-of-goods-sold than traditional multi-year capex, especially because of this rapid monetization pattern.
Capacity has already scaled from ~0.4 GW a year to 1.4 GW annually by the end of Q2. There are targets of more than 2 GW by year-end.
High incremental margins on the rental business once capacity is online
GPU cloud providers often operate at strong gross margins. SpaceX can monetize capacity that was already partially built or can be added efficiently. This means that incremental EBITDA margins on the rental revenue are usually high. This accelerates cash recovery relative to the gross capital outlay.
Parallel monetization of its own AI software and applications
Beyond pure infrastructure rental, SpaceX also generates revenue from Grok through subscriptions and usage, from X through ads, data, and other related services, enterprise APIs, and the planned integration of the Cursor coding tools acquisition.
These application layers ride on the same compute infrastructure and provide additional high-margin streams that could offset build-out costs. AI-segment revenue overall rose sharply to about $2.6 billion in Q2, according to Motley Fool. This was driven primarily by the infrastructure contracts, but the software side is also partially responsible.
Efficient, large-scale deployment and vertical integration advantages
SpaceX has emphasized the rapid construction of power and cooling infrastructure and favorable cost-per-megawatt economics relative to industry benchmarks in some disclosures.
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Combined with its ability to scale capacity aggressively and the fact that many contracts start generating revenue within months of capacity coming online, the effective payback compresses dramatically compared with more conventional multi-year data-center projects.
SpaceX’s dominant near-term recovery path will turn the AI clusters into a hyperscale-style compute rental business for other leading AI companies while still using a portion for internal models.
Tesla headlights have caused a recall of over 20,000 of the company’s two most popular vehicles, the Model 3 and Model Y, due to the low-beam bulb exceeding the maximum allowed intensity according to federal standards.
Tesla initiated the recall with the National Highway Traffic Safety Administration (NHTSA) this morning, stating that the low-beam output “exceeds the maximum allowed intensity in the outer upper-right and outer upper-left areas of the 10U and 90U zone, as prescribed in FMVSS No. 108.”
Tesla sourced the impacted headlights from Marelli Automotive Lighting, a Mexico-based company. The recall impacts 2020-2023 Model Y vehicles and 2017-2023 Model 3 vehicles. It is estimated that every VIN in this recall is impacted by the defect.
🚨 Tesla is recalling 20,349 2020-23 Model Y vehicles and 2017-23 Model 3 vehicles due to an excessively bright headlamp low beam.
Currently, there is no remedy plan in place, as it is still being developed. pic.twitter.com/y34cIO2U0B
— TESLARATI (@Teslarati) August 11, 2026
Typically, Tesla would remedy recalls of this nature through an Over-the-Air software update, which has been a major focus of criticism by the company and its supporters because the NHTSA still refers to it as a “recall,” even though it requires no action by the vehicle owner. The fix is shipped over the internet and downloaded to the car.
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However, there appears to be a potentially different solution for this problem. Tesla has not developed a remedy for this issue, so it could potentially be on the way. The big issue appears to be the fact that these recalled lamps are out of production, and this is an old body style for both vehicles. The headlights and front-end designs are completely different.
Tesla switched to another supplier when the affected headlight design was discontinued. It plans to begin notifying owners of their remedy options by September 15.
Tesla filed a petition protesting the recall to fix the vehicles’ headlight issue, but the NHTSA denied it. Now, Tesla will come up with a solution to fix it.
Tesla has one big financial question to answer for investors: Morgan Stanley
SpaceX AI investment gamble will make it a big winner, firm says
