KEY POINTS
  • Tesla cut prices on its Model S and Model X vehicles last week, and rolled out a free supercharging incentive to entice customers.
  • After laying off production staff in January, Tesla's car plant in Fremont, California, now makes these cars only on day shifts during the week. There's no weekend or nighttime production, employees told CNBC.
  • Employees say Tesla is paving the way to start Model Y production in Fremont. It is also working on a new Model S refresh, aiming for a start of production in September 2019.
Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Tesla Model Y crossover electric vehicle in Hawthorne, California, U.S., on Friday, March 15, 2019.

Tesla is rejiggering its car factory in Fremont, California, to make way for production of the Model Y crossover SUV, as well as a refresh of the Model S with a more minimalist interior design and longer-range battery, according to several current and former employees.

These initiatives could raise costs again for Tesla, just as CEO Elon Musk has vowed to review every 10th page of outgoing expenses, personally. But starting up production of the Model Y in 2019 allows Tesla to tap into the growing SUV segment sooner rather than later, while a Model S refresh would help it maintain or grow its share within the declining market for luxury sedans.