Tesla just introduced its latest electric vehicle, the Model Y, a crossover SUV that will cost from $39,000 to $60,000 depending on configuration.
The Model Y is about 10 percent bigger than the Model 3, seats seven, features a panoramic glass roof and 66 cubic feet of cargo space, Tesla CEO Elon Musk said, showing off a Model Y prototype at the Tesla Design Center in Hawthorne, California on Thursday night.
The company plans to produce four different versions of the new SUV including:
Demand for sport utility vehicles in the United States has been high over the past few years. New models have flooded the market, looking to unseat best-sellers like the Toyota RAV 4, Nissan Rogue or Honda CR-V.
Tesla hasn't offered a new SUV to tap into that demand since it began producing its Model X vehicles in 2015. The X features falcon-wing doors, which delighted some drivers but repelled others. The Model Y ditches this feature.
According to Musk, however, the Model Y will share about 75 percent of its components with the company's Model 3 electric sedans, allowing Tesla to start manufacturing the new SUV for far less money that it spent to begin producing the Model 3.
Auto-makers typically share parts across new models, and sometimes build different models on shared assembly lines. This helps them control costs and get new vehicles to the market relatively quickly.
In the past, Tesla missed its part-sharing goals, production and sales targets.
Its Model X was supposed to share a majority of its parts with Tesla's Model S, but it only wound up sharing around 30 percent after Musk originally planned for 60 percent.
Pricing of the Model Y is a key consideration for investors. Bernstein senior technology research analyst Toni Sacconaghi wrote in a note ahead of the model's debut, "We'd expect the initial price to be around $55,000. This will be key to manage against cannibalization." He also said that, in the longer term, the Model Y could enjoy higher gross margins than Tesla's Model 3, a car that the company intended to offer for an accessible price, aiming to bring electric vehicles to the masses.
Tesla previously said it would most likely manufacture the Model Y at Gigafactory 1, its sprawling battery plant outside of Reno, Nevada. Musk did not confirm this plan at the unveiling event.
While Tesla has accepted $1,000 "pre-orders," or reservation payments, in the past, Musk did not mention any reservation plans for the Model Y. Customers can order the Model Y on Tesla's website already. Ordering requires a $2,500 payment, due today, to move an order forward.
The CEO spent the better part of the hour-long presentation recounting Tesla's achievements building factories, charging infrastructure and luxury electric vehicles while battling electric car opponents and skepticism. Fans in the audience heckled Musk as they would a stand-up comic, and he bantered with them about where to build a supercharger next, (Saskatchewan, and Kazakhstan were mentioned) and more.
"It's wild to think about, 11 years ago today we'd made literally one car. And a year from now we'll have made a million," Musk mused, echoing the content of a tweet that recently landed him in hot water with financial regulators.
While Musk did not give specific guidance as to the volume of Model Y SUVs the company planned to produce in 2020, he said, "We'll probably do more Model Ys than S, X and 3s combined."