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The Model Y and Gigafactory 3 heralds a faster, more profitable Tesla
Tesla’s second-quarter report and its succeeding earnings call provided updates on what could very well be two of the electric car maker’s most pertinent projects to date: the Model Y ramp and Gigafactory 3 in Shanghai, China. Based on Tesla’s recent reports, it appears that both initiatives are moving along at an impressive pace, perhaps even faster than initially expected.
Model Y
When Elon Musk unveiled the Model Y last March, he provided a rough timeline for the upcoming vehicle. During his presentation, Musk mentioned that the all-electric midsize SUV would start deliveries starting Fall 2020 for the Long Range, Dual Motor AWD, and Performance versions, and Spring 2021 for the Standard variant. This was quite conservative, considering that Musk has a reputation for setting extremely aggressive targets for the production of the company’s vehicles.
Since then, several reports have emerged which hinted at Model Y production being far less volatile and challenging than the Model 3’s manufacturing ramp, a task so difficult that Elon Musk candidly called the period as “production hell.” In the Q2 Update Letter, Tesla confirmed that preparations for Model Y production have begun in the Fremont factory. The company also mentioned that due to the overlap in the components of the Model Y and the Model 3, the company was able to “leverage existing manufacturing designs in the development of the Model Y production facilities.” This bodes well for the midsize SUV, considering that Tesla had rolled out several improvements to Model 3 production process over the years.
Several other hints have also emerged suggesting that Tesla will be ramping the Model Y with its best technologies available. Recent patent applications, for example, have revealed that Tesla is working on a new wiring architecture that will reduce the wires used in the Model Y to just 100 m per vehicle, a significant reduction from the 1.5 km currently being used for the Model 3. Another patent has also emerged showing the design for a mammoth casting machine, which was hinted at by Elon Musk during an appearance at the Ride the Lightning podcast last month. “When we get the big casting machine, it’ll go from 70 parts to 1 with a significant reduction in capital expenditure on all the robots to put those parts together,” Musk said.
Considering all the innovation that is being implemented for the Model Y, it appears that Tesla is doing all it can to ensure that the vehicle does not encounter delays with its rollout. In fact, with Fremont already being prepared for the Model Y, and with giant casting machines being designed specifically for the vehicle, it almost seems like Tesla is trying to start the manufacturing of the SUV earlier than expected. There’s a long time between today and Fall 2020, and that seems to be more than enough to work out the manufacturing of a vehicle that is, in essence, a taller, more spacious Model 3.
Gigafactory 3
Over in China, another understated Tesla project is taking shape. When Elon Musk attended Gigafactory 3’s groundbreaking ceremony back in January, he stated that initial production of the Model 3 in the facility would begin by the end of the year. This target timeframe was met with disdain and skepticism from critics, many of whom have noted that no car factory has ever been built in the speed that Musk wanted. Six months later, Gigafactory 3’s general assembly building is practically complete, and its interior is already being tooled. Footage from drone flyovers showed the rise of the factory, and images from Tesla’s Q2 Update Letter showed that some sections of the facility already have robots installed in them.
Quite interestingly, it is not Elon Musk that is providing ambitious timeframes for Gigafactory 3 anymore. Instead, it is Chinese government officials. Local reports, for example, have suggested that China is looking to start initial Model 3 production as early as September, with the facility ramping to an output of 150,000 vehicles per year early next year. Compared to Wall Street’s estimates, which currently suggest that Gigafactory 3 will produce around 35,000 to 40,000 vehicles in 2020, China’s goals for the facility are far more optimistic.
Gigafactory 3 has pretty much exceeded expectations since work in the facility entered overdrive. Just like the Model Y ramp, the key to Gigafactory 3 lies in the company’s innovations with Model 3 production. Tesla mentioned this in its Q2 Update Letter. “Gigafactory Shanghai continues to take shape, and in Q2 we started to move machinery into the facility for the first phase of production there. This will be a simplified, more cost-effective version of our Model 3 line with capacity of 150,000 units per year – the second generation of the Model 3 production process,” Tesla wrote.
There is no doubt that 2019 is turning out to be an incredibly challenging year for Tesla. Following the first quarter, which saw lower-than-expected vehicle deliveries, Tesla set new delivery records in the second quarter, only to end once more at a loss. Yet, together with this, the company also ended the quarter in more stable footing, as shown by its $5 billion in cash, the largest in its history. This was recently addressed by Baird analyst Ben Kallo, who noted that “back to the cash flow they generated during the quarter, there’s a couple of hundred million dollars, so this idea that they don’t make money is completely wrong, and the headline needs to change. There’s $5 billion in the balance sheet. They’re not going out of business.” Ultimately, the Model Y and Gigafactory 3 seem to be two projects that are heralding a new era for Tesla: one that is more mature, precise, and poised to disrupt at a scale that’s never seen before.
SpaceX is preparing for the 13th integrated flight test of its Starship system, with a targeted launch as early as Thursday, July 16. The 90-minute launch window opens at 5:45 p.m. CT from Starbase in South Texas.
This comes roughly seven weeks after Flight 12 on May 22, underscoring the company’s accelerating pace in its rapid development campaign. The mission will use the latest Starship and Super Heavy V3 vehicles equipped with Raptor 3 engines. Booster 20 will attempt a controlled boostback burn, followed by a splashdown in the Gulf of Mexico, while Ship 40 will follow a suborbital trajectory.
Starship’s thirteenth flight test is preparing to launch as early as Thursday, July 16 → https://t.co/Rp7VwBzpWx pic.twitter.com/jdpFlQUEpF
— SpaceX (@SpaceX) July 11, 2026
Key objectives for Flight 13 will include demonstrating reliable stage separation, engine performance under various conditions, and controlled reentry.
A major milestone for Flight 13 is the first deployment of 20 next-generation Starlink V3 satellites. These satellites feature advanced laser links for inter-satellite communication, deployable solar arrays, and onboard cameras, six of which will capture imagery of Starship’s heat shield during flight.
Several heat shield tiles on Ship 40 will be painted white to serve as imaging targets, while additional experiments test upgraded tiles on aft flaps, modified attachments on the aft skirt, and load-sensing tiles to measure stresses. The upper stage will also attempt a single Raptor engine relight in space before a targeted splashdown in the Indian Ocean.
These tests build directly on lessons from Flight 12, which introduced the V3 configuration but encountered issues including a booster flip anomaly during boostback and an engine-out event on the ship. Hardware and software modifications on Booster 20 and Ship 40 aim to improve engine relight reliability, startup sequencing, and overall robustness.
Next Starship launch aiming for Thursday https://t.co/SajPPd4pdb
— Elon Musk (@elonmusk) July 12, 2026
The short interval between Flights 12 and 13 highlights SpaceX’s iterative approach. Elon Musk has repeatedly emphasized that Starship launches will become “incredibly common” in the coming years.
The company envisions scaling to rates as high as one launch per hour within 4-5 years, potentially enabling thousands of flights annually. Such cadence is essential for Starship’s goals: establishing orbital refueling for lunar and Mars missions, deploying massive satellite constellations, and making life multiplanetary.
With each flight, Starship edges closer to full reusability and operational maturity. Success on July 16 would mark another step toward routine access to space and the ambitious vision of humanity becoming a spacefaring civilization.
Tesla shared a striking video showcasing the decommissioning of the original Model S and Model X assembly line at its Fremont Factory in Northern California. Completed in just 46 days, the teardown involved heavy machinery dismantling concrete pits, removing robotic arms and conveyors, and clearing the space for new production.
The post, captioned “End of an era,” captured both the end of a historic chapter and Tesla’s aggressive pivot toward its next major initiative, Optimus.
End of an era: Decommissioning the original Model S & X assembly line in just 46 days pic.twitter.com/kGEdfhl62h
— Tesla Manufacturing (@gigafactories) July 10, 2026
The decision to retire the Model S and Model X originated during Tesla’s Q4 2025 Earnings Call in late January 2026. CEO Elon Musk announced that production of the company’s flagship sedan and SUV would wind down by the end of Q2 2026, describing it as bringing the programs to an “honorable discharge.”
Custom orders ceased around early April 2026, with the final vehicles rolling off the line in early May. A special signature delivery ceremony on May 20 marked the emotional close for these vehicles, which had defined Tesla’s early success and luxury EV segment since the Model S launch in 2012.
The primary reason for tearing down the lines was to repurpose the valuable factory floor space for high-volume production of Tesla’s Optimus humanoid robot. Musk had indicated on Earnings Calls that the Fremont S/X line would be replaced by a dedicated Optimus manufacturing line targeting a capacity of one million units per year.
This move aligns with Tesla’s broader strategic shift from traditional vehicle manufacturing toward robotics and artificial intelligence, leveraging the company’s expertise in autonomy, AI training, and high-volume production.
Optimus, Tesla’s general-purpose humanoid robot, is designed to perform repetitive or dangerous tasks in factories, warehouses, and eventually homes. Powered by Tesla’s AI and Neural Networks, it aims to be a versatile, affordable platform. Production of Optimus Gen 3 is already underway in limited form at Fremont, with full-scale output on the converted line expected to begin in late July or August.
Tesla is targeting rapid scaling, with internal ambitions pointing toward tens or even hundreds of thousands of units annually by the end of 2026.
Longer-term, Tesla is constructing a much larger second-generation Optimus facility at Giga Texas, with potential capacity reaching millions of units per year. The company views Optimus as a transformative product that could eventually surpass its automotive business in scale and value, enabling widespread deployment of useful robots across industries. CEO Elon Musk has even predicted it would be the most popular product of all-time.
As one era closes at Fremont, another is rapidly taking shape.
Elon Musk posted a candid admission on his social media platform X on June 9, declaring that he had been “clearly wrong” about Anthropic. The statement marked a notable reversal from his earlier skepticism toward the AI company.
In September, Musk had written, “Winning was never in the set of possible outcomes for Anthropic,” reflecting his view at the time that the startup had lacked the foundation or even the trajectory to succeed in what is an incredibly intense race for advanced artificial intelligence.
Musk’s latest post came amid discussion of Anthropic’s reliance on external compute resources. He praised the company’s progress, stating that Anthropic is “obviously currently the leader in AI” and that “no company has released a model as good as Mythos/Fable,” with expectations of a strong follow-up in Mythos 2.
The tone shifted dramatically from dismissal to acknowledgement of superior performance.
I was clearly wrong about Anthropic. They are obviously currently the leader in AI. No company has released a model as good as Mythos/Fable and they will undoubtedly have Mythos 2 ready soon.
And I would never cut them off in a way that hurt them badly, even as a competitor.…
— Elon Musk (@elonmusk) July 9, 2026
The context of Musk’s comments added significance. Anthropic has been operating under a recent compute deal with SpaceXAI, Musk’s AI infrastructure-focused venture. The pair entered a short-term GPU lease agreement initiated in May, providing Anthropic access to critical computing power for training and deploying its frontier models.
SpaceXAI signs agreement with Anthropic for massive AI supercomputer access
Some observers had speculated that Musk could leverage this dependency to disadvantage a rival. Musk directly addressed the possibility, writing, “I would never cut them off in a way that hurt them badly, even as a competitor. That’s not my style.”
To support his commitment to ethical competition, Musk referenced concrete examples from his other companies. Tesla famously open-sourced its entire portfolio of electric vehicle patents in 2014. The move was designed to accelerate the global adoption of sustainable transportation technology rather than protect proprietary advantages.
Tesla also made its Supercharger network available to competing electric vehicle manufacturers, transforming what could have remained an exclusive charging ecosystem into a shared infrastructure that benefits the broader industry and reduces barriers for EV adoption.
Musk further pointed to SpaceX’s practices, noting that the company launches satellites for competing commercial systems “with no increase in price or use of unfair terms.” He extended the principle to his social platform, observing that “even my worst enemies attack me on this platform,” underscoring preference for open discourse over retaliation.
These examples have illustrated Musk’s long-standing philosophy that long-term technological progress is best served by open competition and infrastructure sharing rather than leveraging market power to stifle rivals. In the fast-evolving AI sector, where compute resources and model capabilities determine leadership, Musk’s stance suggests a willingness to compete on innovation and performance alone.
Musk’s admission arrives as SpaceXAI itself advances its own frontier models while maintaining business relationships across the ecosystem. By publicly correcting his earlier assessment and reaffirming principles of fair play, Musk highlights a model of competition that prioritizes advancement of the field over short-term tactical advantages.
SpaceX reveals Starship Flight 13 launch date
Tesla shows rapid teardown of Model S and X lines, paving the way for Optimus at Fremont
