Tesla Inc. (IW 500/99) Chief Executive Officer Elon Musk unveiled a cheaper electric crossover SUV, the Model Y, in a bid to regain momentum after a rough start to the year.
Taking the stage at the company’s design studio in Hawthorne, California, Musk showed off a blue prototype of the mid-sized SUV, which is roughly 10% roomier than its best-selling sedan. Three higher-end versions of the new vehicle will start delivery in Fall 2020, with a standard one available in Spring 2021, priced at $39,000 and equipped with a 230-mile battery, according to the company.
Getting the new vehicle into production quickly will be key for Tesla to build on the momentum of its Model 3, a less-expensive sedan that’s catapulted the automaker up the sales charts and helped Musk post back-to-back quarterly profits for the first time. The new Model Y may also help Tesla shift its lineup toward the tastes of U.S. consumers, who are increasingly ditching sedans for bigger crossovers and SUVs.
“Entering the SUV/crossover market effectively doubles Tesla’s addressable market,” Gene Munster, a managing partner of venture capital firm Loup Ventures, wrote ahead of the event.
Musk, 47, took the stage at Tesla’s design studio before a crowd of customers and fans, but was uncharacteristically subdued. He spent much of his presentation talking about the company’s struggles with manufacturing.
"He was not the usual charismatic Elon Musk. He was super low-key," said Michael Harley, executive editor of Kelley Blue Book, who was at the event. "He was almost apologetic. It was a bit of a reality check. People in the crowd like the car, but Musk only spent a fraction of his time talking about it."
Only one of the new models was driven onto the stage, where it shared the limelight with other, older vehicles. At the 2016 unveiling of the Model 3, by contrast, Musk showed off three cars and flashed the rising number of customer deposits on screen as they rolled in from people eager to be among the first in line to reserve them.
At the Model Y’s unveiling, Musk said nothing about taking orders or deposits, although Tesla’s website allows people to make "fully refundable" pre-order payments of $2,500.
The Model Y is making its official debut after a rough patch for both Tesla and Musk. In late February, the company announced it would finally offer a $35,000 version of the Model 3, though it linked the ability to do so with a plan to close almost all of its stores and pivot to online-only ordering.
This blindsided employees and investors alike, and Tesla backtracked 10 days later, saying in a blog post that more stores would remain open but vehicle prices would have to rise by about 3% on average worldwide.
Meanwhile, the U.S. Securities and Exchange Commission has reignited its battle with Musk over his use of Twitter early this year, after the billionaire tweeted about the company’s annual production outlook without clearing the post in advance with a designated in-house lawyer. The SEC’s next filing in the ongoing saga is due with a federal judge in New York by March 19.
By Dana Hull