Tesla has yet to choose where to produce the Model Y, the company’s upcoming entry-level sport utility vehicle. CEO Elon Musk explained during Tesla’s first-quarter 2019 earnings call that, although the firm is expected to start producing the vehicle sometime next year, it has not chosen a firm location.
“For Model Y production, we are right now trying to decide whether Model Y vehicle production should be in California or Nevada, and we expect to make a final decision on that very soon,” Musk said. “But in the meantime, we have ordered all of the tooling and equipment required for Model Y.”
Musk stressed that this will not delay the car, which was unveiled in March with a fall 2020 date to start deliveries. Similar to the Model 3 sedan that launched in July 2017, the first batches will be for the $47,000 300-mile long-range model and above, with the $39,000 230-mile standard range version shipping in spring 2021.
“We do not expect this to in any way delay production of Model Y, but it’s currently a very close call between Nevada and California as to whether we do the Model Y at Giga or at Fremont,” Musk said. “Those are the two options, and we will hopefully be able to make the decision in the next few weeks.”
Musk had said in previous earnings calls that the Fremont plant was fully packed, so it was unlikely that Tesla could produce the car at the facility. When Ryan Brinkman, analyst from JPMorgan, asked about this on Wednesday, Musk said that the team has decided it could add more building space to the west side and use some of the internal space currently used for warehousing to make room. That will avoid building production lines in tents, as seen in June 2018 as Tesla tried to reach its Model 3 production goals.
“We believe it actually can be done with minimal disruption to add Model Y to Fremont,” Musk said.
The Model Y is the second phase of a three-part plan to transform Tesla from a niche premium automaker into a more affordable mass market brand, an idea first outlined in the 2016 second master plan. This started with the Model 3, which launched in a $35,000 version in March and is set to continue with the Model Y. The Pickup Truck, which Musk has described as having a “cyberpunk” design, is set to launch later this year.
The car could be a big moment for Tesla. Musk explained in the January earnings call that “the mid-size SUV segment is worldwide the most popular vehicle,” which means global demand could be about 50 percent higher than it is for the Model 3. Tesla is aiming to build 1 million Model Ys per year.
Not all of these will be built in the United States. Tesla has started constructing a Gigafactory in Shanghai, its first outside of the United States, with the goal of producing entry-level versions of the Model 3 and Y for local consumers. Musk has stated that affordable cars should be produced on the same continent as the buyers, suggesting more factories could be on the way.