Tesla Motors Inc. released a lower-priced version of its Model S electric sedan, a move to tap into the huge enthusiasm for its coming Model 3 and boost flagging sales growth of its existing cars.
On Thursday, it began selling a $ 66,000 version of its Model S with a battery modified to limit its travel range to about 200 miles on a charge. The price is 9% below the prior lowest-cost model.
Separately, the National Highway Traffic Safety Administration on Thursday said it is looking into reports of a suspension problem involving the Model S. The safety regulator also chastised the Palo Alto, Calif., company for what it said was a "troublesome nondisclosure agreement" that could discourage customers from reporting safety problems with the vehicle.
NHTSA said it has sought information from Tesla and car owners about any suspension problems, but hasn't begun a formal investigation. Faulty suspensions can cause drivers to lose control of vehicles. The agency didn't suggest the vehicles are defective or suffer from widespread safety problems.
A Tesla spokeswoman had no immediate comment.
Tesla is reviewing the suspension issue but hasn't found it to be a widespread problem, said a person close to the company. Its agreement with customers was intended to keep them from discussing issues on Internet message boards, but wasn't meant to prevent talking with regulators, this person said.
Tesla asked an owner to sign the agreement in exchange for covering some repair costs, the company confirmed.
DailyKanban, an automotive blog, reported earlier on customer reports of Tesla suspension problems and the response from U.S. regulators.
In after-hours trading, Tesla's stock lost $ 3.13 a share after declining 2.6% to $ 229.36 in 4 p.m. Nasdaq Stock Market trading on Thursday.
RBC Capital analyst Joseph Spak said the Model S price reduction could be a sign that Tesla wants to expand its market by pulling in sales that might have been delayed by the enormous attention surrounding the Model 3's introduction earlier this year.
Tesla Chief Executive Elon Musk is racing to complete work on the $ 35,000 and up Model 3, a vehicle that will better compete with gasoline-powered cars from General Motors Co. , Nissan Motors Co. and other mainstream auto makers.
Since March, the Model 3 has generated nearly 400,000 reservations from people who put down a $ 1,000 deposit for a vehicle that is expected to be priced beginning at $ 35,000. Tesla has said it expects first shipments of the Model 3 in the second half of 2017.
The Model S 60 unveiled on Thursday comes with a battery that can be software-upgraded to travel about 250 miles on a charge. It also can be purchased in an all-wheel-drive configuration that is priced beginning at $ 71,000. Both vehicles will have access to the company's fast-charging network for no additional fee, and come standard with its Autopilot driver-assist hardware.
The auto maker less than a year ago discontinued a 60-kwh battery version of the Model S and introduced a more expensive 70-kwh version of the entry model that remained on the market for just a short time. Tesla said on Thursday it is discontinuing the 70-kwh version and offering the new model to appeal to people interested in the brand but unable to afford the longer-range versions.
The pricing move comes after Tesla reported Model S sales declined in the first quarter compared with the fourth quarter of 2015. While sales of the sedan were up on a year-over-year basis, it blamed production constraints and other factors for the sequential sales decline.
For now, the newest versions of the Model S will be built using a 75-kwh battery and their range will be capped by software at about 200 miles. Customers can unlock the additional travel range by paying an additional $ 9,000, the company said.
Buyers typically spend more than $ 100,000 apiece on a Tesla vehicle to purchase added battery power, additional seating, all-wheel-drive and other options.
Tesla said a standard 75-kwh Model S also is now available and is priced beginning at $ 75,700. It will be capable of driving about 250 miles on a battery charge.
Write to Mike Ramsey at michael.ramsey@wsj.com
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