Tesla (NASDAQ:TSLA) held an event at its Los Angeles design studio last night, where its latest electric vehicle — the fifth to be produced by the company — was unveiled. The Tesla Model Y is a crossover SUV, based largely on the Model 3 sedan. CEO Elon Musk says the Model Y will ship next year at an initial starting price of $47,000 with a $39,000 version available in 2021.
SUVs are the hottest segment in the auto market, and Musk expects demand for the Model Y may be even greater than for the Model 3. Investors seem a little uncertain about that, with Tesla stock down 2.23% in pre-market trading.
Tesla Model Y Is Official
After months of speculation and teaser images, Tesla took the wraps off its latest electric vehicle last night. The Tesla Model Y is a crossover SUV and, like the Model 3, intended to be a mass-market offering.
The least expensive Standard Range version (230 miles) will be priced at $39,000 when it’s released in 2021. However, TSLA is starting off with several more expensive versions that will arrive in 2020. The Long Range Model Y (300 miles) goes for $47,000 while a version with All-Wheel-Drive ups that to $51,000. The Performance Model Y will set buyers back $60,000. In 2021, Tesla says that seven-person seating will be offered as an option.
Note: Those prices are as announced at last night’s event. However, at the time of this writing, Tesla’s website was indicating $48,500 for Long Range, $52,500 for All-Wheel-Drive and $61,500 for Performance.
Musk claimed the Model Y will be “the safest mid-sized SUV by far” and says that it comes feature complete, needing only software updates to unlock advanced self-driving capabilities.
In terms of size, the Tesla Model Y sits between the Model 3 sedan and the Model X SUV, a position it also occupies in terms of pricing. A panoramic sunroof is standard, and there is 66 cubic feet of cargo space.
Like all Teslas, the Model Y also offers acceleration that’s superior to traditional gas-powered cars. Rear wheel drive Tesla Model Y versions clock zero to 60 in 5.5 seconds, dual motor all-wheel-drive versions cut that to 4.8 seconds and the Performance model will hit 60 mph in 3.5 seconds.
Low Risk, High Reward?
TSLA is promoting the Model Y as a low risk/high reward vehicle.
On the reward side of the equation, SUVs are the auto industry’s hottest selling segment. The Tesla Model Y has the potential to be a mass market vehicle, with the additional room it provides over the Model 3 making it ideal for families.
How can a new vehicle be low risk? For one, the Tesla Model Y is launching into that hot SUV market and at a time when demand for electric cars has been ramping up. The combination of being all-electric and an SUV gives it instant appeal. Tesla says the Model Y shares three-quarters of its components with the Model 3, which should greatly reduce both development and production costs. And the company skipped the Falcon doors that have proven such a headache on the Model X.
All that sounds good if you own Tesla stock, but that being said, the Model Y is unlikely to have its own way in the market. Traditional automakers have ramped up their electric car offerings and many of them have also begun to release all-electric crossover SUVs. By the time the Tesla Model Y arrives in showrooms (assuming the company will still have showrooms), it will be competing against electric crossover SUVs that have been available for a year or more, including luxury options from the likes of Audi and Jaguar. And TSLA will be trying to convince buyers to shell out at least $47,000 at launch while also dealing with the winding down of its tax credit on purchase.
How to Pre-order a Model Y
Assuming it doesn’t run into any delays, the Tesla Model Y is expected to arrive in the fall of 2020, with the less expensive Standard Ranger version becoming available in 2021. If you want to pre-order a Model Y, you can do so now with a $2,500 deposit.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.