Investor's Corner

Tesla to begin Model Y tooling this year, volume production at Gigafactory 1 in 2020

In Tesla’s fourth quarter and 2018 full year update released today, the electric vehicle manufacturer held strong in its plan to produce the Model Y crossover SUV. Tooling for the vehicle will begin this year and pave the way for volume production expected in 2020.

Despite prior comments from CEO Elon Musk hinting that the site of production of the company’s upcoming vehicle might be Gigafactory 3 in Shanghai, Tesla indicates in its 2018 Full Year report¬†that Gigafactory 1 in Sparks, Nevada will likely be the site for first Model Y volume production.

“This year we will start tooling for Model Y to achieve volume production by the end of 2020, most likely at Gigafactory 1.”

Since Model Y will use the lessons learned with Model 3 production at the start, Tesla predicts a smoother path to market for the vehicle. One of the variables in favor of that prediction is the fact that Model Y will share about 75% of the components of the Model 3, lowering CapEx for a new production line as compared to Model 3’s line in Fremont. The efficiency enabled by the similarities is further anticipated to quicken the speed of the production ramp.

“The cost of the Model Y production line should be substantially lower than the Model 3 line in Fremont, and the production ramp should also be faster”, notes Tesla in its Q4 Update Letter.

Elon Musk has previously estimated a 1 million vehicle per year demand for the Model Y, making it more popular than the Model 3. With the anticipated rapid rate of construction for Gigafactory 3 and its predicted production volume of 500,000 vehicles per year within the next 2-3 years, adding another high-demand vehicle to its manufacturing lines may still be in the cards. However, for now, Tesla may want to place its initial bets on an existing facility well versed in production lines for its potentially more popular Model Y over one that’s yet to be built.

 

Tesla to begin Model Y tooling this year, volume production at Gigafactory 1 in 2020
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