Why Tesla’s “Boring” Model Y Will Be its Greatest Triumph
The Model Y launch will mark a turning point for Tesla.
|Oct 29, 2019|
Tesla product launches historically been big-bang affairs. Whether it was the original Tesla Roadster that brought us the first “cool” electric car, or the Model S, which brought us the first truly practical (if expensive) electric vehicle, each product launch brought something new and exciting to the table. This was also true of the Model X, with its unique Falcon-wing doors, and the Model 3, which is arguably the world's first truly practical and (relatively) affordable electric vehicle. Each product launch, it should be noted, was also so momentous in scope and bleeding edge in innovation that they almost brought the company down with it: Tesla was on the brink of bankruptcy in 2008, 2013, and 2018…each following the launch of a new groundbreaking vehicle.
Enter the Model Y. The Model Y is the sister vehicle to the Model 3. You might call it the “crossover” version of Model 3 as it shares the same platform but it larger in form factor. The Y is expected go on sale by the middle of next year, yet, there is relatively little buzz about the vehicle…at least when compared to Tesla’s prior product launches. Indeed, the Model Y unveiling introduced almost none of the cool “wow factor” innovations that Tesla customers are used to. Model Y is…boring. So boring, in fact, that the product introduction caused Tesla’s stock price to plunge.
Had any other car-maker been introducing a vehicle with the looks, safety, feature, and price of the Y…it would have the automotive world salivating and media pundits fawning over this “Tesla-killer.”
But this time around, boring is good. After years of pushing Tesla to the edge of bankruptcy with each new product launch, the launch of a solid and profitable product this time around is nothing to scoff at. Boring is also relative. Had any other car-maker been introducing a vehicle with the looks, safety, feature, and price of the Y…it would have the automotive world salivating and media pundits fawning over this “Tesla-killer.” It is merely the fact that the Y is Tesla product that creates the perception that the product is mundane.
In fact, the Model Y could actually be Tesla’s most important product. The Y shares much of its design with the 3, meaning the R&D cost of the Y should be significantly lower than the 3. Additionally, due to the experience learned in the Model 3's production process, Tesla has already said that the total capital expenditures on the production facility will end up being about 50% of what it was for the 3. As a crossover, the Model Y has the advantage of competing in a more profitable and quantitatively larger market. This means the Model Y will cost less to develop, but could still end up outselling the 3 over the long term….with higher profit margins per vehicle.
These profit margins will also be further improved with the introduction of new innovations at the factory level, including the “Multi-Directional Unibody Casting Machine” that will simplify the production of the car’s frame from about 70 parts down to a single piece of aluminum. Tesla may also have found a means of reducing the total amount of wiring in the vehicle and ways of allowing machines to do most of the vehicle’s wiring…a normally expensive and labor-intensive process.
Model Y might be boring, but boring is exactly what Tesla needs right now. The tumultuous launch of Model 3, Elon Musk’s sometimes ill-conceived tweets, an SEC investigation…etc have left investors wary of the company. The Model Y is the much-needed breather needed in advance of the Tesla Semi, Tesla Truck, and Tesla Roadster launches.