Report: Tesla to build Model Y in Fremont, release Model S refresh in September – Green Car Reports

Report: Tesla to build Model Y in Fremont, release Model S refresh in September - Green Car Reports
Tesla Model S Refresh With Minimalist Interior and Model 3 Motors Coming This Year: Report
Will the upcoming Tesla Model Y crossover be built in Fremont, California, alongside the related Model 3 sedan?

A CNBC report Wednesday, citing several current and former employees, says that Tesla is indeed opting for that—to make the Model Y at its Bay Area assembly plant. It follows comments made by CEO Elon Musk in Teslas April 24 call with investors, in which he discussed a plan that involved repurposing some current warehousing space and building the Model Y there too, with minimal disruption.

Sales of Tesla's electric vehicles hit $3.72 billion in the first quarter which represented a 41% drop from the fourth quarter of 2018, when the company generated $6.32 billion in automotive revenue. In its first quarter vehicle deliveries and production report, Tesla said it delivered 63,000 vehicles during that quarter, down from a record 90,700 in the fourth quarter of 2018.

The move, if true, represents a logistical change for Tesla. Musk had previously said the facility was too packed—and unviable for the addition of a fourth model to the plant that already makes Model S, Model X, and Model 3. And in its Q4 2018 financial letter the automaker had said that Model Y volume production would start by the end of 2020, most likely at Gigafactory 1.

We also need to address the total cost of getting a car from our factory to the customer. Last quarter, there were many expedite fees and routing inefficiencies that led to higher than expected delivery costs. This makes it much harder for Tesla to break even.

Teslas Model S Refresh Is Too Little Too Late

Tesla has not yet confirmed the Model Ys production location publicly. However in that April call Musk said that the company expected to make a final decision on it very soon, and provided some reasons the automaker might have been leaning toward Fremont over Nevada.

Tesla's relatively new CFO Zack Kirkhorn told investors on its first-quarter earnings call this year that "unwinding the wave" of uneven deliveries would be critical in helping Tesla achieve profitability later this year.

The CNBC report, citing the employee sources, also claimed that Tesla was planning a long-anticipated refresh of the Model S sedan for September. That would bring more extensive changes like a 400-mile range and a redesigned cabin and interface.

While Tesla has refused to say so publicly, it appears that it has come to terms with the secular drop in demand for the Model S and Model X. Indeed, the reports of the refresh appear to suggest that the new Model S and Model X will be assembled on a single line, making room for future Model Y production at Teslas overstuffed Fremont plant. That plan matters, since it suggests that, even with a refresh, Tesla expects to be winding down production numbers to well below the previously stated 100,000 units per year.

That would follow up on some upgrades announced last month for the Model X crossover and the Model S sedan—including the addition of fully adaptive damping to the air suspension, plus updated power systems (including a new permanent-magnet motor in front) to support even more range in the Long Range versions, of up to 370 miles for the Model S and 325 miles for the Model X.

CNBC reports the Model S refresh will be modeled after the Model 3 in many ways, with a new minimalist interior like the one that received a lot of attention on the smaller car, premium seats from the Long Range and Performance Model 3, and the new drive units from the Model 3, including different motors, inverter and gearbox.

Correction: This article previously stated the max range was 345 miles, which is only for the Performance trim of the Model S.

Tesla has not officially announced preparations to build the Model Y in Fremont, but it has suspiciously been canceling factory tours of the facility. Most of Tesla's attention has been dedicated to fulfilling orders for the Model 3, so Model S and Model X production only takes place during day shifts with no nighttime or weekend production. Since the Model 3 is much more affordable than a Model S or Model X, there may be far less demand for the two pricier Tesla models. We'll see if a facelift and an increase in driving range can get people excited about a Model S once again.

The CNBC report also goes into some alleged details on the Fremont factorys preparations for producing the Tesla Model Y, though Tesla has yet to announce any significant details of its plan for production. Heres more on that from CNBC:

Elon Musk posits Tesla under attack by the fossil fuel industry, what do you think?

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.

It seems like Tesla isn't very good at multitasking. While the company has been off revealing the smaller Model 3 sedan and Model Y SUV as well as the yet-to-be-released semi truck and Roadster, the Model S and Model X have not been getting much attention. The Model S recently received a price cut along with the Model X, but bigger changes could be in store.

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 hasnt officially announced that preparations in the factory had begun.

I dont know him very well… Ive talked to him a couple of times. [But] I like him because hes competitive, Cuban said of Musk. Hes obviously got you know a genius spirit and mind for innovation, which I love. But hes also very competitive. And when youve got a bunch of bureaucrats trying to come at you in a world where there arent bright line guidelines, thats tough.

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.

Referring to the Tesla founders tussle with the SEC over the use of his Twitter, Cuban reflected on his own battle with the regulator in 2008 and said that while Musk was under a different microscope, he just had to try to bite your tongue no matter how hard it is, because they dont care.

Elon Musk urges Tesla employees to catch up to hit delivery record – Autoblog

I think what CNBC means by the rather obvious statement that the S and X are each made with a lot of parts is that theyre each made with a lot of different parts. This makes combining the existing production lines difficult, though it shouldnt be impossible. Streamlining everything could save Tesla a lot of money.

Cuban made the comments to Editor-in-Chief Andy Serwer in a conversation that aired on Yahoo Finance on Thursday, May 23 in an episode of Influencers with Andy Serwer, a weekly interview series with leaders in business, politics, and entertainment.

Well likely hear more about Teslas plans for the Model Y and its Fremont plant from Elon Musk during the second quarter earnings call later this summer.

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The Tesla Model Y Came With No Surprises and Thats the PointTesla is Updating Battery Software After Model S Catches Fire in Hong KongElon Musk Says Tesla Needs Financial Micromanagement or It Will Go BrokeAbout the authorJustin T. WestbrookJustin T. WestbrookStaff Writer, Jalopnik


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