It was the biggest revelation in the history of Tesla (NASDAQ: TSLA) ! The company's new crossover SUV Model Y had iconic gullwing doors and a price under $ 40,000! And on March 14 came the big revelation, and the car … had none of these things (at least not yet).
Perhaps legions of gullwing fans or impatience disappointed that no deliveries would begin for a year and a half, but the stock market dropped Tesla's shares following the announcement by about 5%, falling lowest level all year. But here are the reasons why Tesla fans – and skeptics – should not worry too much about Model Y (at least not yet).
1. It's very similar to the Model 3.
The Model Y follows the classic formula of a crossover SUV: a manufacturer takes the frame of one of its saloons already in production – in this case the Model 3 – and changes that design just enough to put an SUV body on the sedan.
In the case of the model Y, however, it really looks like a hatchback model 3. The Model Y will have some extra cargo space and will lend the additional rear row of folding X model jump seats, giving the car up to seven seats. The compromise is a little shorter. It will share about 75% of its parts with the Model 3.
On the one hand, this should help Model Y to roll out smoothly: Tesla had already solved many of the headaches that drove the model up. 3 Production in its Gigafactory – where the Model Y is to be produced as well – it should be comparatively simple, small Making adjustments to the production line and loosening them.
On the other hand, with the cars so much Are Model Y's sales simply not included in the sales of the existing Model 3?
. 2 Crossover SUVs are selling, but …
Frankly, I'm probably the perfect target market for the Model Y. I currently drive a Toyota Prius, but now that my kids are getting older, it could I'll use more cargo space and an extra row of seats if Grandma wants to attend the taekwondo tournament or the ballet night. I've been following Tesla for a while, and a generous friend let me drive his Model 3 a few weeks ago (thanks, Mike!), And I thought it was fun to drive.
I would consider buying a Model Y, and there are probably many people like me out there. According to J.D. Power is about half of new car sales to SUVs or Crossovers. And for larger passenger cars, there are limited options for fuel-efficient versions. For example, there is currently only one hybrid minivan in the US (the Chrysler Pacifica). This means that the potential market for Model Y should be huge.
However, the price of the Premium versions of the Model Y, which are expected to be rolled out by the end of 2020, will be between $ 47,000 and $ 60,000. This makes the vehicle inaccessible to many potential Model Y customers (myself included). The $ 39,000 version of the Model Y will not be available until 2021, so sales are likely to be limited by then. Remember that Tesla is very sporadic in terms of delivery dates. It is therefore not unreasonable to believe that the Base Price Model Y is not available for three years or more.
In the meantime, you can bet that Tesla's competitors will launch their own crossover SUVs, possibly in hybrid or electric versions. Just four days after the Tesla announcement, Fisker announced that he would also offer a $ 40,000 SUV by 2021. Or you could get the Chrysler Pacifica hybrid today for about the same price as the base model Y – definitely not that cool, but still available.
. 3 Roasting Bigger Fish
CEO Elon Musk did not spend much time talking about the car on his Model Y rollout. Instead, he went into detail about the production battles the company has been struggling with in recent years. This repeated the comments he made in a January letter to the employees: "The road is very difficult." The company recently received an announcement that most Tesla stores should shut down to keep vehicle costs down. The company's widely-announced solar roof seems to be on technical issues, which is why it's not widely available.
While Tesla made a profit in the past two consecutive quarters – a first for the company – its margin may well be on the rise, as the cheaper basic version of the Model 3 is more widely available. All this happens independently of the introduction of Model Y and has much more influence on Tesla's investment theory than that of Model Y.
Investor Take Away
Musk predicts that Tesla will sell 1 million Model Y, and that's probably not However, it is unclear how long it will take for production to start and then ramp up, how much the Model Y will feed into the sales of the higher-priced Model X and the comparable Model 3, and what competitors and a rapidly evolving automotive landscape will become in the meantime do that. Oh, and the little question of whether Tesla can actually make a lasting profit when it moves to cheaper vehicle offers.
Simply put, Model Y will not necessarily be a deciding factor for Tesla. And even if it does, we will not know it for at least a couple of years. So resist the urge to buy or sell the company based on these news.