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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.
Elon Musk
Delaware Supreme Court reinstates Elon Musk’s 2018 Tesla CEO pay package
The unanimous decision criticized the prior total rescission as “improper and inequitable,” arguing that it left Musk uncompensated for six years of transformative leadership at Tesla.
The Delaware Supreme Court has overturned a lower court ruling, reinstating Elon Musk’s 2018 compensation package originally valued at $56 billion but now worth approximately $139 billion due to Tesla’s soaring stock price.
The unanimous decision criticized the prior total rescission as “improper and inequitable,” arguing that it left Musk uncompensated for six years of transformative leadership at Tesla. Musk quickly celebrated the outcome on X, stating that he felt “vindicated.” He also shared his gratitude to TSLA shareholders.
Delaware Supreme Court makes a decision
In a 49-page ruling Friday, the Delaware Supreme Court reversed Chancellor Kathaleen McCormick’s 2024 decision that voided the 2018 package over alleged board conflicts and inadequate shareholder disclosures. The high court acknowledged varying views on liability but agreed rescission was excessive, stating it “leaves Musk uncompensated for his time and efforts over a period of six years.”
The 2018 plan granted Musk options on about 304 million shares upon hitting aggressive milestones, all of which were achieved ahead of time. Shareholders overwhelmingly approved it initially in 2018 and ratified it once again in 2024 after the Delaware lower court struck it down. The case against Musk’s 2018 pay package was filed by plaintiff Richard Tornetta, who held just nine shares when the compensation plan was approved.
A hard-fought victory
As noted in a Reuters report, Tesla’s win avoids a potential $26 billion earnings hit from replacing the award at current prices. Tesla, now Texas-incorporated, had hedged with interim plans, including a November 2025 shareholder-approved package potentially worth $878 billion tied to Robotaxi and Optimus goals and other extremely aggressive operational milestones.
The saga surrounding Elon Musk’s 2018 pay package ultimately damaged Delaware’s corporate appeal, prompting a number of high-profile firms, such as Dropbox, Roblox, Trade Desk, and Coinbase, to follow Tesla’s exodus out of the state. What added more fuel to the issue was the fact that Tornetta’s legal team, following the lower court’s 2024 decision, demanded a fee request of more than $5.1 billion worth of TSLA stock, which was equal to an hourly rate of over $200,000.
Delaware Supreme Court Elon Musk 2018 Pay Package by Simon Alvarez
News
Tesla Cybercab tests are going on overdrive with production-ready units
Tesla is ramping its real-world tests of the Cybercab, with multiple sightings of the vehicle being reported across social media this week.
Tesla is ramping its real-world tests of the Cybercab, with multiple sightings of the autonomous two-seater being reported across social media this week. Based on videos of the vehicle that have been shared online, it appears that Cybercab tests are underway across multiple states.
Recent Cybercab sightings
Reports of Cybercab tests have ramped this week, with a vehicle that looked like a production-ready prototype being spotted at Apple’s Visitor Center in California. The vehicle in this sighting was interesting as it was equipped with a steering wheel. The vehicle also featured some changes to the design of its brake lights.
The Cybercab was also filmed testing at the Fremont factory’s test track, which also seemed to involve a vehicle that looked production-ready. This also seemed to be the case for a Cybercab that was spotted in Austin, Texas, which happened to be undergoing real-world tests. Overall, these sightings suggest that Cybercab testing is fully underway, and the vehicle is really moving towards production.
Production design all but finalized?
Recently, a near-production-ready Cybercab was showcased at Tesla’s Santana Row showroom in San Jose. The vehicle was equipped with frameless windows, dual windshield wipers, powered butterfly door struts, an extended front splitter, an updated lightbar, new wheel covers, and a license plate bracket. Interior updates include redesigned dash/door panels, refined seats with center cupholders, updated carpet, and what appeared to be improved legroom.
There seems to be a pretty good chance that the Cybercab’s design has been all but finalized, at least considering Elon Musk’s comments at the 2025 Annual Shareholder Meeting. During the event, Musk confirmed that the vehicle will enter production around April 2026, and its production targets will be quite ambitious.
News
Tesla gets a win in Sweden as union withdraws potentially “illegal” blockade
As per recent reports, the Vision union’s planned anti-Tesla action might have been illegal.
Swedish union Vision has withdrawn its sympathy blockade against Tesla’s planned service center and showroom in Kalmar. As per recent reports, the Vision union’s planned anti-Tesla action might have been illegal.
Vision’s decision to pull the blockade
Vision announced the blockade in early December, stating that it was targeting the administrative handling of Tesla’s facility permits in Kalmar municipality. The sympathy measure was expected to start Monday, but was formally withdrawn via documents sent to the Mediation Institute and Kalmar Municipality last week.
As noted in a Daggers Arbete report, plans for the strike were ultimately pulled after employer group SKR highlighted potential illegality under the Public Employment Act. Vision stressed its continued backing for the Swedish labor model, though Deputy negotiation manager Oskar Pettersson explained that the Vision union and IF Metall made the decision to cancel the planned strike together.
“We will not continue to challenge the regulations,” Petterson said. “The objection was of a technical nature. We made the assessment together with IF Metall that we were not in a position to challenge the legal assessment of whether we could take this particular action against Tesla. Therefore, we chose to revoke the notice itself.”
The SKR’s warning
Petterson also stated that SKR’s technical objection to the Vision union’s planned anti-Tesla strike framed the protest as an unauthorized act. “It was a legal assessment of the situation. Both for us and for IF Metall, it is important to be clear that we stand for the Swedish model. But we should not continue to challenge the regulations and risk getting judgments that lead nowhere in the application of the regulations,” he said.
Vision ultimately canceled its planned blockade against Tesla on December 9. With Vision’s withdrawal, few obstacles remain for Tesla’s long-planned Kalmar site. A foreign electrical firm completed work this fall, and Tesla’s Careers page currently lists a full-time service manager position based there, signaling an imminent opening.
Delaware Supreme Court reinstates Elon Musk’s 2018 Tesla CEO pay package
Tesla Cybercab tests are going on overdrive with production-ready units
