Luxury electric car maker Tesla Motors is making its Model S sedan faster and safer in an effort to compete better with other high-end sedans.

At an open-to-the-public unveiling Thursday night that included bumping music, free alcohol and test rides on an airport tarmac, CEO Elon Musk revealed an all-wheel-drive version of the car that includes self-driving features he called "auto pilot."

The announcement ended a week of speculation following a cryptic Musk tweet that said, "About time to unveil the D and something else."

Taking the stage with more than 1,000 Tesla fans in the audience, he explained that the "D" stands for "dual motor." The current Model S is a rear-wheel-drive car with one motor. The "D" will have two motors — one powering the front wheels and one powering the rear wheels.

TESLA-MOTORS-LAUNCH/

Tesla Motors Inc CEO Elon Musk unveils a new all-wheel-drive version of the Model S car in Hawthorne, Calif., on Thursday. (Lucy Nicholson/Reuters)

Musk said unlike all-wheel-drive systems on gas-powered cars, which tend to be heavy and make the cars less efficient, Tesla's system improves the speed, acceleration and mileage by optimizing which motor is used.

The dual motor version of the P85 performance sedan will have a top speed of 250 km/h, compared with the current model's top speed of about 210 km/h. It will accelerate from 0-60 mph in 3.2 seconds, akin to exotic sports cars.

"This car is nuts. It's like taking off from a carrier deck," Musk said at a municipal airport near Los Angeles where another of Musk's companies — the commercial rocket firm SpaceX — is based. The crowd obliged with cheers and applause.

After Musk left the stage came the rides, which demonstrated both the car's acceleration and safety features. Attendees, many dressed up and some well-lubricated with drink, were not allowed behind the wheel.

Upgraded safety features

The all-wheel-drive system helps grip slippery roads, and analysts have said Tesla needed it to boost sales in the Northeast and Midwest, as well as Europe. The company sold 13,850 cars in the U.S. this year through September, down three per cent from a year ago, according to Autodata Corp.

Tesla is also significantly upgrading its safety features.

The Model S will steer itself back if it wanders from its lane and brake automatically if it is about to hit something. Those features are offered on luxury competitors, as well as mainstream brands such as Ford, Hyundai and Toyota.

But Tesla is going a step further. Its new cruise control system that senses traffic can move the car over a lane when the driver uses the turn signal. It will also use cameras to read speed limit signs and decelerate accordingly. Volvo has a system that reads signs and alert drivers if they are over the limit, but does not change the speed.

Musk said "auto pilot" does not mean that the car could drive itself — as he put it, a driver cannot "safely fall asleep." Although, he said, on private property — not public roads — a driver could summon the car remotely.

While the addition of all-wheel drive catches Tesla up with other in the luxury car market, pulling together all the driver-assist features impressed Brian A. Johnson, an analyst with Barclay's. "It's a year ahead of the timeframe I was expecting," he said.

Raj Rajkumar, a pioneer of self-driving cars with Carnegie Mellon University, was similarly impressed but wondered about the limitations of "auto-pilot" — how would it perform in different weather and road conditions.

The dual motor will be a $4,000 option on the base and mid-range Model S, which start at $71,000. The base price for the P85 with all-wheel drive — which will be known as P85D — is $120,000. The cars went on sale immediately on Tesla's website; the P85D will be delivered beginning in December, while the other versions begin delivery in February.