Elon Musk has been teasing the Tesla Model Y for months. The EV maker is currently ramping up production for the mass-market Model 3, which has received more than 400,000 reservations. During Tesla’s first quarter earnings call, Elon Musk provided key details on the upcoming Model Y. Musk has previously said that the next-gen SUV crossover would have the same Falcon wing doors as the Model X.
Tesla Model Y to arrive in 2019 at the earliest
Musk told investors that the Model Y would enter production in 2020, or late 2019 in the best case scenario. Model Y is key to Tesla’s ambition of selling one million vehicles per year in 2020. Industry experts were expecting Tesla Model Y to arrive sometime next year. Tesla CEO revealed that the SUV crossover would be based on a “completely different” platform from the Model 3.
Previously, Tesla had disclosed that the Model Y would be built on the same chassis as the mass-market Model 3. Musk’s latest comment reflects a change in the company’s plans. Building an entirely new platform takes time, sometimes it may take years. Once Tesla rolls out Model Y, its product line would look like: S, 3, X, Y. Musk initially wanted to name the mass market car as Model E, but Ford threatened to sue Tesla because it had trademarked that name. So, Tesla changed it to Model 3.
Tesla Model Y to get rid of the 12-volt battery
Using the same platform for multiple vehicles allows them to share key components, which helps reduce manufacturing costs and improve margins. Tesla’s Model S and Model X are based on the same platform. By announcing that Model Y will have an entirely new platform, Tesla has signaled that it has started preparing for the next generation of electric vehicles.
The new platform would lead to more automation in the manufacturing process. Tesla plans to add more robots to the production line. Musk told investors that the Model Y would ditch the “vestigial” 12-volt battery architecture used in other vehicles, reducing the length of wiring required. EV makers including Tesla still use several components such as heating, infotainment, and powered seats that are found in traditional vehicles. All these systems and components rely on the 12-volt battery architecture.
Elon Musk explained how ditching the 12-volt system could improve the manufacturing process and reduce costs. He pointed out that the wiring harness on Model S was 3km. The Model 3 wiring will be only 1.5km in length. Tesla’s new platform aims to reduce it to just 100 meters on the Model Y. Morgan Stanley analyst Adam Jonas predicts that Model Y would become the EV maker’s top-selling vehicle upon release.
Tesla’s quarterly results
During the first quarter, the EV maker posted record revenues on the back of record vehicle deliveries. But it incurred a loss of $397.2 million or $1.33 per share. Wall Street analysts were expecting a loss of 83 cents per share on revenues of $2.6 billion. Tesla reported revenues of $2.7 billion during the quarter. Automobile sales revenues jumped 123% YoY to $2.3 billion. Revenues from the solar business jumped to $213.9 million.
The California company delivered about 25,000 vehicles during the quarter, the best ever. That’s impressive, considering Tesla’s Model X was suffering from production and quality issues not too long ago. The record Q1 deliveries put the company on track to achieve its target of delivering 50,000 vehicles in the first half of 2017. Tesla had delivered a total of 84,000 vehicles last year.
Musk assured investors that the Model 3 production plans were on track. Initial production is set to begin in July. After that, the company will ramp up production to 5,000 units per week by the end of the fourth quarter, and further scale it up to 10,000 units by the end of 2018. Investors were more concerned about the Model 3 rollout than the Q1 losses.
Tesla said it was planning to add 100 new retail, delivery and service locations across the world. It will also add 100 mobile repair trucks in the current quarter to minimize overhead costs of servicing. The EV maker aims to double the number of Superchargers around the world.
No idea what Apple is doing on the car front
For the last couple of years, many analysts have proposed the idea that Apple should buy Tesla to enter the electric car market. Musk said during the earnings call that there was no such plan in the works. He told investors that Apple was not interested in collaborating with Tesla. When asked whether he considers Apple a partner or a rival in the self-driving car market, Musk said, “I don’t know what they are doing on the car front.” There was no indication that the iPhone maker was looking to enter the space.
Just a few days ago, Apple was granted permission to test its self-driving car system using Lexus vehicles on California roads. It’s not yet clear whether the Cupertino company plans to make its autonomous driving systems and apps available to other automakers or build its own cars. It’s unlikely that the iPhone maker would build the cars itself.
Musk envisions a future when Tesla would become even more valuable than Apple. He sees a “clear path” to Tesla surpassing Apple’s market value of $776 billion. The EV maker is currently valued at $50 billion. The upcoming Tesla Model Y and Model 3 would be crucial for the company as it gears up to cater to the mass market.