The Model 3, the fourth and arguably most important of Tesla’s electric vehicle to date, is just starting to come off the assembly line at the company’s factory in Fremont, Calif. And while, CEO Elon Musk ramps up the Model 3 through what he calls “production hell,” he is already making—and changing—plans for the company’s next electric vehicle, the Model Y.
Musk first floated the idea of a smaller sport-utility vehicle two years ago on Twitter before the information was deleted. It wasn’t until the company’s May earnings call that Musk shared how different this Model Y crossover was going to be.
And now, it’s changing again.
Back in May, Musk surprised everyone when he indicated the new Model Y— a compact crossover SUV that will be critical to meeting the company’s goal of delivering 1 million vehicles a year by 2020—would be based on a different platform than the $35,000 Model 3 sedan. He argued that the Y platform would use even less electrical wiring compared to the Model 3 and, as a result, be even easier to build.
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Musk’s executive team has since brought him back from the edge.
“Upon the counsel of my executive team, thanks guys, who reeled me back from the cliffs of insanity, the Y will in fact be using substantial carryover from 3 in order to bring it to market faster,” Musk said during an earnings call this week.
Musk noted that the Model Y will have a relatively low technical and production risk as a result.
That doesn’t mean Musk won’t pursue his initial plan to build an electric vehicle with a different architecture than its existing vehicles, which would slash the amount of electrical wiring required and
“I still think we want to do the crazy thing in the future, but it will have to wait until after the compact SUV,” he said.
Musk isn’t the only one who views the Model Y as critical to pushing the company into “major automaker” territory. Earlier this year, Morgan Stanley analyst Adam Jonas, who has historically taken a rosy outlook of Tesla, said in a research note that the Model Y will be the company’s highest selling model.
“We believe the small SUV segment will eventually be the largest segment in the world across all OEMs,” Jonas wrote. “We also expect Model Y to be at the center of an on-demand ride sharing service (“Tesla Mobility”) due to its larger passenger compartment, luggage space, and modular seat configuration.”
