UPDATE: Simplest example explaining this entire long-winded post is: Car1 (S85) - 265 miles range, one large rear motor Car2 (S75D) - 268 miles range, two smaller motors front and back Car2 (S75D) is cheaper to produce! _________________________________________________________ So I'm doing some basic arithmetic and it looks like for any given range, a dual motor Model S is equal to or cheaper to produce than a single motor. The additional cost to add dual motor is no more than $2000 and if range is held steady, the battery capacity can be reduced creating a cost savings of $1875 - $3300 (probably more). Most of the data is simply unavailable so I'm using multiple paths to try and find the actual values. I am trying to find the marginal range extension for a Model S per KWh addition to the battery. Obviously the dynamics change based on the size of the battery. Overall the 60KWh battery provides 208 miles range so 3.46 miles per KWh average (I'm not looking for average, trying to find the additional range at the margin), the 85KWh provides 265 miles range netting 3.12 miles per KWh average. This indicates that as the pack gets bigger the additional miles per KWh range goes down. The 25KWh difference between the S85 and S60 nets an increase in range of 57 miles, so at that point the additional miles per KWh is only 2.28! Since that's the average over the 57 miles it might be higher for the 61st KWh and lower for the 85th Kwh. The addition of the extra motor nets a 17 mile improvement for the S60 and 30 miles for the S85 (have they explained yet why there is almost a doubling of extra range in the 85?). Therefore the addition of dual motors has the same impact as anywhere between 7.5KWh and 13.2KWh of additional battery capacity. We don't know Tesla's cost of battery and there are different opinions all around and different measures used. Some quote just the cell cost and others include all of the additional components for a completed pack. I've seen current speculation between $250 - $350 per KWh for completed pack (probably $200 - $260 for just the cells). If we conservatively assume $250KWh for completed pack including connections and cooling, the battery cost savings for reducing pack size by 7.5KWh and 13.2 KWh is $1,875 and $3,300. So the savings in using less batteries while achieving the same range is $1,875 to $3,300. And in reality battery size can actually be reduced further because the weight benefit of the reduced pack size will also help increase range further. Tesla currently charges $4000 for the dual motor. While Tesla have targeted 25% gross margins, most manufacturers (I'm guessing Tesla included), aim for at least 50% gross on options so the cost of the additional motor plus the power electronics is no more than $2000 after subtracting the cost savings of the reduced rear motor size. Therefore the additional cost to add dual motor is no more than $2000 and if range is held steady, the battery capacity can be reduced creating a cost savings of at least $1875 - $3300 (probably more). This obviously involves lots of assumptions and if anyone has input on any of those assumptions to help make them more accurate, please share. It appears that for the same range, it would cost Tesla at most the same money to use AWD. This isn't to say that Tesla should have kept range the same and made all cars standard with AWD by reducing the battery size appropriately to maintain range (although this indicates they easily could have done exactly that and essentially become like Audi with all cars having AWD). But this basically means that the extra $4k everyone is paying is simply for that extra range not the AWD since the AWD could have been included at the same cost as 2WD with no increase in production costs. Why did they choose to not make AWD standard for all cars and keep the range the same? I'm sure there are plenty of reasons; a few I can think of are: 1. Increase average revenue per vehicle. If they had kept all range the same and made AWD standard, in theory they could have still offered a $4k option for 20 miles of increased range using slightly bigger batteries but the uptake would have been very low and the complexity of producing slightly larger batteries as an option is not cost effective so that would not have worked. 2. They are getting customers used to paying extra for AWD so later when the cost of batteries drops substantially and AWD actually does cost more for a given range, they will be ahead (although I doubt dual motor will be cheaper than single motor after accounting for battery savings for a very long time). 3. They would like to keep pushing range higher and this method allows them to do so because they can cost effectively offer a range extension beyond the base options. On the other hand the benefits of them instead choosing to keep the range the same and just making AWD standard for all cars are: 1. Increased production efficiency and reduced cost by having the same 2 small batteries in all cars (except performance where the premium paid more than balances out the cost of the larger motor). This would actually further bring down the cost of dual motors making it certainly cost effective and cheaper for a given range to single motor now and for at least the next decade. 2. Increased perceived brand value in colder climates. In many colder locations, you can see a significantly higher percentage of Audi's relative to warmer climates. BMW and Mercedes both offer AWD on most of their vehicles but because ALL Audi's have it, laymen generally perceive the brand as being more capable in harsher environments and therefore purchase it in greater quantities then they would if it were just offering AWD as an option. That's not to say Audi outsells BMW or Mercedes in colder climates (they don't), just that the percentage of Audi ownership tends to go up in colder climates compared to the general sales proportions of Audi vs BMW/Mercedes which indicates that in colder climates people are valuing Audi's more than the general population values Audi. Sorry for the long winded post; just found this stuff interesting.