2019 Tech Predictions: Tesla Model Y Launch Will Cement EVs in Mass Market
The Tesla Model Y is set to stun. The company’s forthcoming electric sports utility vehicle is set to offer a cheaper price to buyers looking to get into the market, a reduced-price alternative to the Model X in the same way the Model 3 is a cheaper version of the Model S sedan.
Its launch, expected around March next year, comes at a big time for the electric car industry. There are more battery-powered vehicles on the road than ever before and growth is exponential, paving the way for Elon Musk’s firm to assert itself as an automaker for a broad audience. By rounding out the offerings for electric SUVs, Tesla could end up bringing about the tipping point for electric cars.
We’re reporting on 19 predictions for 2019. This is #5.
Pricing is unknown, but it’s possible to estimate based on its place in the lineup. The Model 3 is expected to eventually reach a starting price of $35,000, while the Model X currently has a starting price of $79,500.
Why It’s the Model Y’s Time to Shine
Tesla has big plans for the Model Y. It aims to build one million of the cars per year, nearly quadrupling the total number of cars the company has ever built. Part of the plan involves a 210-acre Gigafactory in Shanghai, which will produce 250,000 cars per year total, a mix of Model 3s and Model Ys. The Model 3, by comparison, had a backlog of fewer than 500,000 vehicles when it entered production in July 2017.
One million Model Ys would represent a huge share of the electric car market. EV Volumes found there were 3.3 million electric cars on the road in 2017, a figure set to rise to 5.4 million in 2018. A fifth of the electric car market is a gargantuan number of vehicles, but the market is growing at breakneck speed.
On the grander scheme of things, though, it’s a relatively small figure. Around 72 million cars were produced globally in total in 2016, and General Motors alone produces just under 10 million cars per year. If the electric vehicle is going to be a mass market product, it’s not an unreasonable figure.
Why It Could Flop at the Finish Line
It’s hard to say for sure how many buyers a cut-price sports utility vehicle could entice, particularly if it’s priced at a similar level to the Model S. The company bills its sedan as a premium vehicle with more compartment space and better feeling than the Model 3, and it could be hard for buyers to justify a Model Y that sets itself up with the same relationship to the Model X.
Tesla may wind up finding that there are fewer buyers than they thought. The company produces around 1,000 Model S and 1,000 Model X vehicles per week, with most of its production focused on the Model 3 at 5,000 cars per week. While Tesla has big plans for expansion, its competitors do as well, and the prospect of consumers lining up for a more expensive vehicle than Tesla’s previous car seems slim.
Tesla also faces stiff competition. The Jaguar I-Pace is an electric sports utility vehicle with 258 miles of range and a price tag of just $69,500, undercutting the Model X by around $10,000. The Hyundai Kona Electric is also set to offer 258 miles of range, but no word on price yet. Rivian’s R1S, unveiled last month, offers 400 miles of range for just $65,000. Automakers are coming for Tesla.
“2019-20 will bring a broad array of competition in both the mainstream and premium segments from incumbent manufacturers as well as new entrants and Tesla is still many months away from delivering even a single $35,000 car,” Sam Abuelsamid, senior analyst for Navigant Research, tells Inverse. “Hyundai and Kia will have the Kona, Niro and Soul EVs all in that price range in Jan-Feb with 250-mile ranges and others will be coming as well. At the upper end, Jaguar is already delivering the i-Pace, Audi is shipping the e-Tron Quattro in Europe and Porsche will deliver the Taycan in the spring.”
That could place the dampers on a second Model 3-style gold rush.
“I think with increasing reports of quality and customer support issues from Model 3 customers, plus the vast array of new competitors, it’s unlikely you’ll see another M3 style rush of pre-orders for future Tesla products,” Abuelsamid says.
19 Predictions for 2019: What Inverse Thinks
The Tesla Model Y is likely to have a big impact, beyond its price. Tesla has big plans to meet demand, particularly in the China market where electric vehicle sales nearly doubled year-over-year in the first half of 2018. Whether the Model Y itself will sell well is perhaps secondary to whether Tesla will expand, sending its two entry-level electric vehicles around the world to entice consumers. With the market still on the steep rise of an S-curve, Tesla’s vehicle could prove that the cars are here to stay.
Inverse predicts solid levels of reservations when the car goes on sale in March. Without the same hype around an ultra-cheap electric vehicle, and amid a more diversified market, it’s unlikely to receive the same levels of pre-orders as the Model 3. But Tesla’s ability to command respectable reservation figures despite these other factors will show that the electric car market is capable of being boring. In other words, it’s capable of being driven by real demand rather than media hype.
Related video: Rivian Unveils the R1S SUV