Tesla retooling Fremont factory for Model Y, Model S refresh – LeftLaneNews

Tesla retooling Fremont factory for Model Y, Model S refresh - LeftLaneNews
The Man Who Lost $35 Billion in One Year Has Some Advice for Elon Musk
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.

Teslas recent precipitous stock-price decline has led to some renewed speculation that it could be bought by a deep-pocketed tech firm. CEO Elon Musk is said to have discussed a Tesla acquisition with both Google and Apple in the past. The New York University professor Scott Galloway thinks somebody could buy Tesla in 12 months if it drops below $100 a share. But nobody will buy Tesla. The company is on its own from here on out. Visit Business Insiders homepage for more stories. A persistent dream of Tesla boosters has been that a technology giant with piles of cash will swoop in and rescue Tesla from doom, should the carmakers finances become so tattered that bankruptcy threatens.

The company has barely begun to place orders for new equipment to manufacture the Model Y, employees said. And while Musk has suggested that Tesla would probably make the crossover SUV in Fremont, Tesla hasn't officially announced that preparations in the factory had begun.

But technology companies that might have once viewed the multitrillion-dollar global auto industry as a ripe opportunity have now sampled the market and decided the actual building and selling cars probably isnt the way to go. Better to do as Waymo has done, developing a hardware-and-software self-driving system that can be installed in vehicles manufactured by partners such as Chrysler and Land Rover.

Making way for Model Y production in Fremont will require Tesla to combine Model S and Model X production into one line, according to the insiders. These lines at the car plant take up a significant amount of floor space today, at least partly because the S and X are each made with a lot of parts. The Model X is particularly complicated to build — its features include falcon wing doors that open up, rather than out — leading Musk to liken it to a "Faberge egg. "

The problem with this prediction is that nobody wants to buy Tesla anymore — except for maybe investors, who recently gobbled up a nearly $3 billion stock offering. Tesla looked better as an acquisition target a few years back, before it became a 250,000-vehicle-a-year carmaker and revealed that it wasnt immune to the economics of the auto industry.

In addition to the Model Y, Tesla is planning on a full refresh of the Model S, which employees say will likely include an interior with the minimalist look and feel of the newer Model 3, the same drive units and seats used in the higher-end Model 3, and a battery that delivers 400 miles of range on a full charge.

The automakers that want to take the EV plunge have now dived in. Those that havent could plausibly partner with Tesla without having to acquire the California company. In fact, thats what happened when Tesla was much smaller and Daimler and Toyota took equity stakes that led to lucrative exists when Teslas stock price surged.

Video: Tesla Slump Reflects Growing Skepticism of Company Vision

Tesla has recently been canceling factory tours because of "upgrades" being made to the factory, according to Musk, who didn't say exactly what those upgrades entailed.

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Meanwhile, production has already slowed on the current S and X models. In the first quarter of 2019, Tesla laid off a portion of its Model S and X production staff and cut hours for those who remained, as CNBC previously reported. Today, Tesla only manufactures the S and X on day shifts during the week in Fremont. There is no weekend or nighttime production of those cars today, according to the current and former employees.

Tesla is preparing Fremont factory for Model Y, Model S refresh production: report

Last week, Tesla cut prices on its Model S by $3,000 and Model X by $2,000, and rolled out a free supercharging incentive to entice customers, causing some analysts to question whether demand is softening for these older, higher-priced models. This follows a set of upgrades in April that improved the driving range and charging speed for both cars.

Apart from Model Y production in Fremont, the publications sources also claim that the electric car maker is preparing to roll out an interior refresh for the Model S that will give it the same minimalistic theme as the Model 3. The sources further noted that the refreshed Model S would utilize the same drive units and seats as the higher-end Model 3, as well as a battery pack that is capable of delivering up to 400 miles of range in a single charge.

On investor calls recently, Tesla reiterated guidance that it would deliver 90,000 to 100,000 cars in the second quarter of 2019, and at least 360,000 in 2019. It has not said how many of these would be Model S, X and Model 3 vehicles or, eventually, Model Ys.

The publications sources claim that Tesla is only beginning to place orders for the machinery required to manufacture the Model Y. It should be noted that neither Tesla nor CEO Elon Musk has confirmed that the Model Y will indeed be produced in the Fremont factory. The idea even seemed to have been shot down by Musk at one point last year, when he stated that site was already packed to the gills with the Model S, Model X, and Model 3 lines.

Tesla shares fell more than 10% last week on investors' concerns over demand, profitability and the impact of U.S.-China trade clashes on the company. They recovered slightly after an email leaked in which Musk promised that Tesla was on target to meet its second-quarter goals.

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