Tesla Fast Tracks Model Y To Push Into Lucrative CUV Market

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Elon Musk announced in the Tesla Q2 2017 earnings call that he was walked back from the edge of the cliff on Model Y by his executive team. That team convinced him that building Tesla’s next-generation CUV (Compact Utility Vehicle) on the Model 3 platform was the best decision. This maximizes reuse of design work, investments in R&D, supply chain partnerships and flexibility, and potentially more.

“The Model Y will, in fact, be using substantial carryover from Model 3 in order to bring it to market faster,” Elon said.

In practical terms, this means that Model Y will be probably brought to market sooner than most of us expected, with the prototype potentially on track to be revealed at the Tesla Semi event — which is slated for September. Elon has hinted this might happen in the past, noting that the Tesla Semi event would have a special surprise in store for attendees.

The announcement about Model Y is a change in direction for Tesla and shows that the leadership team has learned from its last journey through the fire — the Model X launch. It is easy to forget just how painful the launch was, with deliveries vastly undershooting projections, safety issues, quality issues, and delivery issues. Now that Tesla has stabilized these areas, it seems like this was all ages ago and a distant dream, but it was a nightmare of a launch that cost the company dearly. Customers, investors, and the general public saw Tesla at its worst as it struggled to redesign parts, bring manufacturing of some parts in-house (that weren’t supposed to be done in-house), and rebuild quality control systems.

This move shows that Tesla has grown up and taken the lessons from Model X to heart. It is not a matter of immaturity, but of scale. Scaling up from a company that produces thousands of vehicles per year to a company that produces hundreds of thousands of vehicles per year is a massive effort. It changes how things are done and what you must prioritize. There is no doubt that Tesla is taking on the world — or, at least, the automobile, fossil fuel, energy generation, and energy storage world — and this lesson shows that it is evolving as it scales along the way.

“Model Y will have relatively low technical and schedule risk as a result.”

Reusing the Model 3 chassis means Model Y will inherit the made-for-manufacturing design of Model 3 and allow for shared production resources up to a point. Sharing something as significant as the rolling chassis would allow Tesla to produce them all at the Gigafactory on the exact same production lines, with significantly lower raw material and intermediate material inventory levels. This allows Tesla to keep its cash working for it instead of being tied up in inventory.

Tesla did not share any updates on where the Model Y would be built. Though, we do know from previous updates that it would not be at the Tesla Fremont factory in Northern California. That factory’s production capacity is maxing out, and the Model Y is supposed to be produced in a completely new factory … somewhere.

Image via reddit

One last bit of information that may be important to many of you, the Model Y “will feature a variation of the falcon-wing doors that are a hallmark of the Model X,” sister site Gas2 adds. Elon Musk tweeted as much back in October 2015 … and then deleted that tweet for some reason.


Purported Insider: Model 3 To Be Very Similar To Model S, Just Smaller (Rumor)

Chart of Potential Tesla Models (A to Z)

Electric Car Drivers Want Electric SUVs/CUVs, Midsized Cars, Much More Model Variation (CleanTechnica Report)

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Kyle Field

I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. As an activist investor, Kyle owns long term holdings in Tesla, Lightning eMotors, Arcimoto, and SolarEdge.

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