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Tesla’s Elon Musk details Model Y manufacturing improvements, insight on design
Tesla CEO Elon Musk recently revealed improvements the all-electric car maker has made to its production process for the Model Y crossover SUV. In an interview on Ride the Lightning podcast, hosted by Ryan McCaffrey, Musk discussed lessons learned from Tesla’s prior transition from the Model S to the Model X as applicable to the Model Y, as well as decisions made from the vehicle’s outgrowth of the Model 3. He additionally provided some insight on the design decisions behind the Model 3, which also carry over to the Model Y’s design.
Musk and McCaffrey’s discussion about the Model Y production process began with the question, “What are the biggest lessons learned from the Model 3 program that you’re applying to the Model Y?” However, Musk indicated that a more relative learning comparison came from Tesla’s design of the Model X and its departure from the Model S.
“The Model X ended up being a radical departure from the S…with the Model Y, we wanted to avoid the technology bandwagon we had with the X. It should have been easy going from S to X, but instead, it was hell because of so many new technologies…It would be too risky to the company to do that with the Y,” Musk explained.
I'm celebrating episode 200 of Ride the Lightning, my weekly @Tesla podcast, in THE BEST way possible: a 1-hour interview with @elonmusk himself! 🥳 I can't wait to share our conversation with all of you! It airs this Sunday, June 2 @ 9am ET/6am PT on major podcast services. 🚗⚡️ pic.twitter.com/V0nFrU03Ir
— Ryan McCaffrey (@DMC_Ryan) May 30, 2019
The Model Y crossover needed to address the flexibility expected of vehicles in its class such as cargo capacity, seating for 6 or 7 people, and more ride height than a sedan. Tesla addressed these features while also keeping in mind the effect on battery range a larger vehicle might have, according to Musk.
“We tried to make the car as similar to the [Model 3] as possible except in the case where a change was necessary to achieve SUV functionality…[all] while still having a low drag coefficient and not increasing the frontal area too much,” he detailed. Overall, Musk concluded that CdA (automobile drag coefficient) and mass of the Model Y only affect 8-10% of the battery range when compared to the Model 3.
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The design of Tesla’s Model Y and lessons learned from Model 3 production also led to some manufacturing improvements for the electric crossover. Musk detailed how the Model Y underbody was switched to aluminum casting instead of stamped steel and aluminum pieces, which greatly simplifies the moving parts involved in making the vehicle.
This change effectively means that initially, using two castings to make the structure will take the process from 70 parts to 4 (castings plus joiners), and once the “big” casting machine comes into operation, the process will have brought the process from 70 parts to 1 (casting only). Using casting over stamping reduces the weight of the Model Y, improves MHB (heat produced), lowers cost due to the smaller number of parts necessary, and significantly drops capital expenditure on robots.
As for the manufacturing location of the Model Y, Musk said the decision was not quite final, but the default place was Tesla’s factory in Fremont, California, with the runner-up being Gigafactory 1 in Sparks, Nevada. Producing the Model Y in Fremont would be the fastest way to bring the crossover SUV into production, according to Musk. “One choice isn’t natural over other,” he said. Freemont is producing the Model 3 and the two vehicles share 75% of their components, but Gigafactory 1’s location has a lower cost of living, meaning an overall better value for Tesla.
The similarities between the Model Y and Model 3 being what they are, Musk also discussed with McCaffrey some of the design decisions that initially went into creating the Model 3. In response to the question, “What’s the toughest design decision you had to make on Model 3?”, the CEO cited two primary factors that went into the midsize sedan’s creation: the touchscreen and the nose design.
Reducing the number of screens from two in the Model S to one in the Model 3 came with some pushback, Musk explained. However, he felt that owners would prefer an open view of the road, and everything needed while driving could be fit onto one screen.
This background brought up community rumors about a heads-up display (HUD) being included in Tesla’s vehicles. On the subject, Musk set the record straight – there was never any plan to include a HUD, nor will one be added in the future. He simply doesn’t like them, and the move to self-driving makes them pointless. “We discussed it, but I’ve tried various heads up displays and found they were annoying,” he said. “We felt the car would increasingly go to self-driving…As things are approaching autonomy, why project things you don’t even care about on the screen?”
Something that customers do care about, though, is the look of their car. Musk detailed the difficulties in making an attractive design for the Model 3, which wasn’t easy thanks to the lack of a front grill on the vehicle. “You don’t want to have the nose to look like Voldemort…You’ve got to get some character or it does not look good.”
Also mentioned was the decision to reduce the width of the Model 3 to 185 cm over the 195 cm of the Model S to help sell more cars in Japan. The country’s parking machines only accept cars up to 195.4 cm wide, which leaves very little wiggle room in the manufacturing process to meet. The change to 185 cm meant that any Tesla Model 3 could fit in any parking garage in Japan.
The Model Y is set to begin production in 2020, and reservations are currently open on Tesla’s website.
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Listen to McCaffrey’s full Ride the Lightning podcast interview here.
In a new note to investors on Tuesday, Morgan Stanley analyst Andrew Percoco said that Tesla has one big financial question to answer for investors regarding its Robotaxi rollout, Full Self-Driving software, and Optimus.
Percoco said in the note that, for the most part, investors are still very positive about the direction the company is headed. However, there are some things the firm would like to see, and they have to do with financials.
Tesla (TSLA) Q2 2026 earnings results: miss on EPS, beat on revenue
Tesla bulls are more than convinced that the company’s Full Self-Driving software is proof it can develop physical AI. Financially, however, there are still some questions, especially on elevated spending, which CEO Elon Musk said would occur as the company works to roll out Robotaxi faster and continue developing its Optimus robot.
The latter two are where Tesla will have to prove progress to investors, as Percoco writes that both projects “will require clearer evidence that Robotaxi is scaling and more tangible Optimus proof points to support the ROI on elevated capex.”
Percoco said the second quarter earnings call did not change his long-term thesis of where Tesla is positioned in the AI race, which is out in front. However, there are concerns that weaker gross margins and higher R&D spend will stress financials, and that has “sharpened our (and investors’) focus on measurable progress across Robotaxi and Optimus.”
Additionally, Robotaxi still needs to be proven with more operation in existing cities while maintaining safety but improving how many rides it gives in any given time, he said. For Optimus, Percoco wrote that he is “still looking for evidence beyond commentary around SOP.”
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Morgan Stanley put Percoco in charge of covering Tesla after long-time analyst Adam Jonas transitioned to the automotive side.
Currently, Morgan Stanley has a $415 price target on Tesla and a ‘Hold’ rating on the stock. It is trading at around $330 at the time of publication, which was 2:30 P.M. on the East Coast.
SpaceX’s massive investment in AI will make it a big winner, Argus Research said after the company’s successful earnings call last week.
The firm also upgraded shares to a Buy from Hold and set a $160 price target.
SpaceX (NASDAQ: SPCX) is currently recovering from its heavy AI infrastructure investments, as it spent nearly $16 billion in Q2 alone. The company did this primarily by monetizing high-demand GPU compute capacity at a much faster pace than traditional data center economics would suggest.
Company CFO Bret Johnsen said that SpaceX would be able to pay back anything on new deployments within a year.
There are plenty of ways the company can do this:
Leasing excess compute capacity through contracts
SpaceX has already built Colossus and Colossus II, largely for its own model training. However, much of that capacity is already rented out to third parties. It already has major deals with Anthropic, Google, and Reflection AI. These partnerships are adding billions per month to SpaceX’s spreadsheet.
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High utilization driven by industry-wide scarcity
The demand for advanced AI training and inference capacity continues to exceed what is available for use. SpaceX can fill new racks quickly after they come online, so the capital deployed converts into revenue with minimal idle time.
Additionally, management and outside observers have described the new compute capital as behaving more like a cost-of-goods-sold than traditional multi-year capex, especially because of this rapid monetization pattern.
Capacity has already scaled from ~0.4 GW a year to 1.4 GW annually by the end of Q2. There are targets of more than 2 GW by year-end.
High incremental margins on the rental business once capacity is online
GPU cloud providers often operate at strong gross margins. SpaceX can monetize capacity that was already partially built or can be added efficiently. This means that incremental EBITDA margins on the rental revenue are usually high. This accelerates cash recovery relative to the gross capital outlay.
Parallel monetization of its own AI software and applications
Beyond pure infrastructure rental, SpaceX also generates revenue from Grok through subscriptions and usage, from X through ads, data, and other related services, enterprise APIs, and the planned integration of the Cursor coding tools acquisition.
These application layers ride on the same compute infrastructure and provide additional high-margin streams that could offset build-out costs. AI-segment revenue overall rose sharply to about $2.6 billion in Q2, according to Motley Fool. This was driven primarily by the infrastructure contracts, but the software side is also partially responsible.
Efficient, large-scale deployment and vertical integration advantages
SpaceX has emphasized the rapid construction of power and cooling infrastructure and favorable cost-per-megawatt economics relative to industry benchmarks in some disclosures.
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Combined with its ability to scale capacity aggressively and the fact that many contracts start generating revenue within months of capacity coming online, the effective payback compresses dramatically compared with more conventional multi-year data-center projects.
SpaceX’s dominant near-term recovery path will turn the AI clusters into a hyperscale-style compute rental business for other leading AI companies while still using a portion for internal models.
Tesla headlights have caused a recall of over 20,000 of the company’s two most popular vehicles, the Model 3 and Model Y, due to the low-beam bulb exceeding the maximum allowed intensity according to federal standards.
Tesla initiated the recall with the National Highway Traffic Safety Administration (NHTSA) this morning, stating that the low-beam output “exceeds the maximum allowed intensity in the outer upper-right and outer upper-left areas of the 10U and 90U zone, as prescribed in FMVSS No. 108.”
Tesla sourced the impacted headlights from Marelli Automotive Lighting, a Mexico-based company. The recall impacts 2020-2023 Model Y vehicles and 2017-2023 Model 3 vehicles. It is estimated that every VIN in this recall is impacted by the defect.
🚨 Tesla is recalling 20,349 2020-23 Model Y vehicles and 2017-23 Model 3 vehicles due to an excessively bright headlamp low beam.
Currently, there is no remedy plan in place, as it is still being developed. pic.twitter.com/y34cIO2U0B
— TESLARATI (@Teslarati) August 11, 2026
Typically, Tesla would remedy recalls of this nature through an Over-the-Air software update, which has been a major focus of criticism by the company and its supporters because the NHTSA still refers to it as a “recall,” even though it requires no action by the vehicle owner. The fix is shipped over the internet and downloaded to the car.
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However, there appears to be a potentially different solution for this problem. Tesla has not developed a remedy for this issue, so it could potentially be on the way. The big issue appears to be the fact that these recalled lamps are out of production, and this is an old body style for both vehicles. The headlights and front-end designs are completely different.
Tesla switched to another supplier when the affected headlight design was discontinued. It plans to begin notifying owners of their remedy options by September 15.
Tesla filed a petition protesting the recall to fix the vehicles’ headlight issue, but the NHTSA denied it. Now, Tesla will come up with a solution to fix it.
Tesla has one big financial question to answer for investors: Morgan Stanley
SpaceX AI investment gamble will make it a big winner, firm says
