At Tesla’s annual shareholder meeting Tuesday, chief executive Elon Musk shed new light on the company’s next sport-utility vehicle, the Model Y, while confirming the production schedule for the new Model 3, the company’s entry-level auto priced at $35,000.
Tesla is set to begin production of the Model 3 next month, nearing the day when the first customers will be able to get behind the wheel. Buoyed by the mass market appeal of the Model 3, Tesla hopes to produce half a million electric cars by 2018, vastly ramping up its output over last year, at 85,000 vehicles. Early customers of the Model 3 can choose the car’s color and the size of its wheels, Musk said. But as production accelerates later this year and into 2018, additional configurations will open up. Model 3 customers eventually will be able to choose between two motors, one designed for highway travel and the other for stop-and-go traffic, optimizing for acceleration and mileage economy.
Demand for the Model 3 isn’t slowing, Musk said. Customers who reserve one now won’t see their vehicles until late next year.
Based on Tesla’s previous estimates for the release of the Model 3, the company is slated to deliver the first configuration of the car on time. But Tesla has been beset by production delays in the past. The company shipped fewer of its Model X’s last year than it planned, citing supplier issues and an overly ambitious timeline. At the shareholder meeting Tuesday, Musk said the limited configuration options available for the first round of the Model 3 will help streamline the production process, and get the first round of cars out on the road. Some analysts are praising this approach.
“We believe Tesla was positively surprised by demand for the Model 3 and having been scarred by the Model X launch issues, are very focused on trying to meet their production goals,” said RBC Capital analyst Joseph Spak, in a research note in March.
Others are skeptical that Tesla can sustain demand and profitability on its autos. Brad Erickson, a research analyst at Pacific Crest Securities said Tuesday that he has “major reservations” on Tesla’s stock, underpinned in part by the Model 3’s ability to turn a profit.
Meanwhile, Musk also offered the first glimpse of the Model Y, which is scheduled to hit the road by 2019. Musk didn’t offer additional details about the car’s design, but he said that he expects demand for the Y to exceed that of the Model 3.
Separately, at the end of September, Tesla plans to show off a working prototype of its new semitrailer truck. “We’ve shown it to a number of organizations that buy heavy-duty trucking and they all love it,” Musk said. “They just want to know how many can they buy and how soon.” He added that customers of heavy-duty semis are giving Tesla feedback on the design, helping to keep the truck tailored to their needs.
Teasing the audience, he said, “I’d really recommend showing up for the semitruck unveiling. Maybe there’s a little more than we are saying here.”