Tesla preps for Model Y production

Tesla CEO Elon Musk has confirmed that the electric automaker will start tooling for the upcoming Model Y, expected to enter production in 2020 at Nevada's Gigafactory. The upcoming model will be an SUV based heavily on the Model 3 sedan and was initially forecast to go on sale in 2019, but has been delayed due to problems with Model 3 production that were not resolved until the second half of last year.

"Since Model Y will be built on the Model 3 platform and is designed to share about 75 percent of its components with Model 3, the cost of the Model Y production line should be substantially lower than the Model 3 line in Fremont, and the production ramp should also be faster," Tesla said in a letter to investors published days ago.   

Production of the Model Y at the Gigafactory, which currently produces batteries and other components for existing Tesla models, is expected to greatly streamline the assembly process as batteries will not have to be transported to another site in California for final assembly. The start of production of the Model Y at the Gigafactory also means that assembly of other models could begin there after 2020, something the company had been planning for some time as the Fremont plant approaches its capacity ceiling.

When it goes on sale, the Tesla Model Y will face competition from a number of newcomers to the electric SUV segment, including entries from Mercedes-Benz, Audi and Volkswagen, all of which are in the process of rolling out electric SUVs and crossovers. Tesla has not announced a price range for the Model Y, but the company has indicated in the past it will be an affordable volume model that will sit below the Model X when it comes to pricing. A starting price of $40,000 is expected by Tesla observers, at least for the base model, which will be sold at some point in the production cycle along with Performance and longer-range variants, per Tesla's new lineup structure.
 

The company's comments regarding sharing 75 percent of its components with the Model 3 speak for themselves — Tesla is aiming for entry-level buyers and wants to compete with gasoline-engined crossovers while saving substantial development and production costs due to the maximum unification with the Model 3. In effect, the teething issues of the Model 3 will have solved a big chunk of Model Y production ramp-up. At least that's what Tesla hopes.

"This year should be a truly exciting one for Tesla," the automaker said in a letter to investors following the release of Q4 2018 results. "Model 3 will become a global product, the profitability of our business should become sustainably positive, our new Gigafactory Shanghai should start producing cars and we will start tooling for Model Y production."
 

As significant as the launch of the Model Y will be for the electric automaker in 2020, one of the main goals of 2019 will be to increase Model 3 production in order to satisfy demand in new markets outside the U.S. Tesla's aforementioned Gigafactory Shanghai is expected to serve as the main production facility for China in the future, but until that happens the U.S. factory will have to serve Europe and China in the near future.

"Model 3 production volumes in Fremont should gradually continue to grow throughout 2019 and reach a sustained rate of 7,000 units per week by the end of the year," the automaker said in a letter to investors. "We are planning to continue to produce Model 3 vehicles at maximum production rates throughout 2019. Inclusive of Gigafactory Shanghai, where we are initially aiming for 3,000 Model 3 vehicles per week, our goal is to be able to produce 10,000 vehicles per week on a sustained basis. Barring unexpected challenges with Gigafactory Shanghai, we are targeting annualized Model 3 output in excess of 500,000 units sometime between Q4 of 2019 and Q2 of 2020."
 

Source: Read Full Article