Pictures of Tesla Model Range, Model Y Reveal, Model U pickup render (TruckTrend), and Roadster 2
Al Castro's picture

With Company History Making Record Productivity and Profits and Four New Vehicles Coming, Tesla Must Turn the Page and Forge Ahead

Tesla always seems to have side distractions they can never shake off, mostly originating from their mercurial CEO. But with both record profits and productivity, Tesla mustn’t destroy momentum to seize the moment and not be distracted by FBI investigations or stock fluctuations. They have four upcoming vehicles that will help them corner the electric car market at least for a while, and they need to capitalize on that.
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Tesla Corporation, the counter car establishment electric vehicle maker, and renewable energy resource solutions company, is at another crossroads in its growing pains of deciding how it is going to expand its facilities so that it may produce new vehicles. The company has struggled to keep up production of Model 3 to 5,000 units per week to have to double that to 10,000 soon for things like leasing and/or subscription, fleets, and the global market. By adding two additional what probably will be mass market models of the four upcoming vehicles to their portfolio, Tesla complicates its production space problem. Present and future customers, investors, and even the “shorts,” or short sellers, wonder where they’ll assemble and store these vehicles for shipment post-production:

  • The next vehicle most likely to head for production is Tesla Semi for 2019.
  • A reserve customer says his tractors will come in 2020.
  • After that Tesla Model Y heads for production early 2020.
  • The Model Y unveil is in March 2019. Don’t be surprised if Model U makes a surprise appearance.
  • Tesla CEO Elon Musk recently said at the last recent earnings call he approved Y for production.
  • Then comes Roadster 2 for production also in 2020.
  • Musk says Y must come first before 2 (sounds like algebra).
  • Model Y and some Model 3 overseas production will happen at the new Gigafactory plant in Shanghai China.
  • Model U is shaping up for 2021. But this all depends if they figure out where for two of three of the models, and if those three are on production schedule.
  • Tractors and high end sports cars usually don’t need a long assembly line, can be assembled by hand, and can do a slow ramp up.
  • There’s speculation of using part of the Gigafactory in Nevada (Semi).

Tesla Corporation (TSLA-NASDAQ) pitched another gigantic tent a few weeks prior for what they say is for "wrapping vehicles to protect in transit." A Tesla spokesperson told Business Insider that the additional 4,000 square foot tent is also meant “to provide shade for workers” after cars are assembled in the plant. Recently in an earnings call CEO Elon Musk told reporters that he approved the Model 3 CUV variant Model Y for production. This all comes after the good news about Tesla’s third quarter profits and productivity. But this with the second tent now begs the question: with the new vehicles soon upcoming, what room is left for Tesla to build them?

What’s Next for Tesla and Where to Build

Tesla has now slated four vehicles for production for what is coming down to a matter of months, one in 2019, two for 2020, and one possibly for 2021, but with the exception of Model Y at Shanghai, they haven’t announced where they are going to build them. Although completely two different kinds of vehicles in opposite, high end sports cars and tractor trucks are both vehicles of a bespoke nature requiring attention to detail or special customization needs for the customer in layouts and trim levels, and usually require at least some kind of hand assembly. Of the four, the Tesla Semi Tractor and Roadster, most likely will be low or lower volume vehicles and probably will need less space for final assembly, and be more flexible with ramp up schedules and rates.

According to the last check of Tesla’s ramp up production schedule, the next vehicle should be Semi for 2019, Y for early 2020 with Roadster 2 later in the year, and U possibly by 2021. Musk recently told an earnings call he recently approved Model Y for production. Model Y is the CUV variant of Model 3 that the company expects to be more popular than 3 because of its utility.

Model Y: “Another Potential Production Hell”

Expected to have a price point somewhere between mid-range Model 3 and a base Model S, the Model Y will have cost savers like no leather seating at all, and will forgo the now signature iconic but costly falcon wing doors of her big sister Model X. Model Y will be a pared down version of X to sell to the masses as a more family oriented vehicle than the Model 3 sedan, and not at a Model X price. It is expected that Model Y will have the same platform and battery pack options as Model 3, so the charging ranges should basically be the same, save for minor differences.

Model U: Tesla’s Most Anticipated Vehicle since Model 3

Model U will be Tesla’s debut entrance into the extremely competitive class 2 full sized pickup truck segment lead by the Ford F-150. The vehicle will probably be the most anticipated vehicle since Roadster 2 was unveiled. Speculation has reached such a frenzy, that online places like the Tesla Forum are still talking about the Truck Trend renders and proposal for the upcoming vehicle.

The renders apparently have won critical acclaim in the Tesla community as the most hopeful expectation of what the actual vehicle will look like. The authors of the proposal and the render’s artist used the Tesla design language to tastefully design and style the vehicle and make a proposal for one like a true Tesla would be. Prototypes, pre-production vehicles, factory or design studio renders have been spotted no where for no one to have an actual idea what the truck will look like. Tesla plans to unveil Model Y in March 2019. It wouldn’t surprise me if Elon does with Model U what he’s done with Roadster, and give that vehicle a surprise debut.

Tesla has mentioned nothing about Model U other than Musk tweeting his intentions to shift segments from medium heavy duty sized pickup, like a GMC Topkick with a flatbed utilizing Semi’s chassis and a pared down cab smaller than the class 8 size, to an outright class 2 full sized pickup truck, taking on Ford’s stranglehold on the segment. So shifting segments really means a whole new ground up vehicle if it is to truly compete with the likes of Ford.

Back in June Musk did give his vision of how the truck would materialize, with "crazy" torque, two motors, all-wheel drive, and a suspension able to adjust to the load the vehicle is hauling. He also said it would have 360-degree cameras, sonar, and the ability to parallel park on its own.

Tesla Forum fans are hoping that the cheapest single cab variant will go as low as MSRP $60,000, USD no options, but they’re also saying it shouldn’t surprise potential buyers if the range topper off road 4x4 higher charger range so bigger battery pack double cab variant with towing capacity is a MSRP $150,000 maxed out loaded to the hilt vehicle, as Tesla is a luxury brand, and its electric pedigree for such a vehicle will be competitive in this segment to exact such a price.

Because this vehicle will be Tesla’s first mass market truck, keeping in mind that Semi is another kind of beast for her own purposes and for fleets, not necessarily for the masses, Forum members are expecting the after market accessories industry to take off like wildfire for Model U. The camping industry as well.

No word yet as to where assembly for Model U will be, but with a 2021 target Tesla still has time to decide where.

The Tesla Vehicle Portfolio: Still Corners the Market and Sets Their Place at the Table

With all these vehicles, and Semi too, a seven vehicle portfolio would put Tesla on the legacy auto maker map with having a line-up that makes them competitive across the entire model range, and legitimizes them as an actual automobile manufacturer, not just a tech startup or a technology company that they morphed into so much more.

For example, although they do not produce a heavy duty truck or tractor in the US like Tesla soon will, Honda has an eleven passenger car/SUV/CUV/pickup portfolio here in the US. Mazda is considered one of the smaller players in the legacy industry, they have about 8 vehicles in their North American portfolio, their largest market. Another tiny and niche player but still respected nonetheless, is Subaru with its flat boxer engined all wheel drive 9 vehicle portfolio.

With only one or two competing all electric cars now on sale from the Europeans, nothing but Bolt from the Americans (Focus Electric is dead and forget about Chrysler they’re hopeless with BEVs unless you want to count Fiat e500 compliance car), one or two models from the South Koreans, Honda Clarity in BEV version, and the Nissan Leaf from Japan, Tesla still corners the all electric car market at all segments even when Model U is launched. Despite Tesla no one is still making a competing full sized BEV pickup truck. Chevy Bolt, the Honda, Nissan, Kia, and Hyundai all sit in their own respective segments that they are not luxury vehicles, thus not really considered a direct competitor to anything in the Tesla portfolio. We unfortunately like to compare any of them between them, a Bolt and/or say, a Tesla Model 3, because they all are or were the only few BEVs around at launch. Over the next two years that’ll radically change with even more choices.

Also remember that the vehicles from startups like Workhorse, Bollinger, or Rivian are either PHEVs made for fleet use only so far, or high end rugged terrain off road utility BEV vehicles. Comparisons between those and U are to be made, but U is being made to compete with Ford. Bollinger, et. al. compete upmarket with each other and probably the likes of Land Rover, maybe Jeep, and even more likely Hummer, if it were still around today to be electrified . . . U probably can do most, not all things a Rivian can. But its mission is more about Ford than it is Bollinger to wish them all well.

So here’s the thing about Models Y and U: they are expected to be very popular mass market vehicles like Model 3. Hardly able to keep up production with 3, that they need to double production of that car to 10,000 vehicles per week for the global market, shows that Tesla needs more room to grow if they want to keep production goals of all three models.

Why Worry About Space? Because Tesla is Now Productive and Profitable

Coming off of what was a more positive news cycle in spite of volatile stock price fluctuations, lingering Tweetgate blowback, and a recently announced FBI investigation into Tesla’s business practice of reporting productivity, the company was finally able to deliver to investors in the third quarter what it had promised last year.

Tesla reported profit of $311.5 million, or $1.75 per share, for the third quarter ended Sept. 30, compared with a loss of $619.4 million, or $3.70 per share, a year earlier. With a severe stock price drop back in August, Tesla shares are now once again selling over $300 per share. Analysts are mixed about what this means for Tesla, but the bottom line is that they had a very successful third quarter to prove they can be profitable, with no obstacles seen for the next one by the end of the year. With this profit experts are saying Tesla may not need to raise cash to pay for upcoming debt payments due, and if they continue, they may not need extra money to outlay for production and ramp up of new upcoming models.

"Assuming R&D spending is not delayed and Tesla is not forced to introduce a lower price (Model 3) prematurely to maintain volume, Tesla could be self-funded," Jefferies analysts wrote in a client note. Since the company went public it has reported annual net losses since 2010.

This good news is all possible because in this same reporting quarter Tesla had its most productive volume output in the history of the company, thus attaining its productivity goals for the first time. The electric car maker said it produced 53,239 Model 3 vehicles, almost doubling the volume of the second quarter. And as an extra measure of sureness in the last week of the quarter, Tesla assembled an additional 5,300 Model 3 sedans included in the numbers reports. And since most of these vehicles were dual motor, Tesla proved it is capable of achieving a production rate of more than 10,000 drive units per week, it said in a statement.

During the quarter, it transitioned Model 3 production “from entirely rear wheel drive at the beginning of the quarter to almost entirely dual motor during the last few weeks of the quarter,” it said. “This added significant complexity, but we successfully executed this transition and ultimately produced more dual motor than rear wheel drive cars in Q3.”

Tesla produced 26,903 Model S luxury sedans and Model X luxury SUVs, which was slightly higher than the second quarter and in line with the company’s full-year projections. Deliveries totaled 83,500 vehicles, of which 55,840 were Model 3s, 14,470 were Model Ss and 13,190 were Model Xs.

Shanghai Gigafactory to the Rescue

According to a recent Shanghai government filing for an environmental impact study, it appears Tesla intends to assemble Model Y at Tesla’s soon to become online Gigafactory in Shanghai, China. Phase 1 of the factory’s mission begins at opening hopefully early in 2020. To ease Fremont workload and spread out productivity, CEO Musk also intends to build overseas Model 3’s at the 860,000 square foot site that houses the plant. Costing $2 billion USD to build the site, the plant will have a 250,000 car annual capacity.

Tesla Semi: Tesla Says 2019, but Where?

A reservation holder of 10 Tesla Semis was told by Tesla, according to online Freight Waves, to expect delivery by 2020, a year further than the expected production target. No explanation was given. Tesla has stated its intention to put the tractor into production by 2019 as the next vehicle.

But what’s troubling is that there’s no mention of where assembly will be, with time ticking away. Although she is a gigantic electric wholly mammoth, a truck tractor like Semi sits on a simple to make ladder frame chassis in which the motors, battery pack, wiring, and cab are placed on top. There is very little robotic welding at final assembly, in fact due to customer specs for each unit most of the assembly process is done by hand. And hand assembly usually doesn’t require a long manufacturing assembly line like it does for a vehicle like Model 3.

Ironically the same kind of process can be said and had for Roadster 2 when it enters production. This is one of the reasons why both of these vehicles are expensive in their own ways, starting around $175,000 and up depending on configuration, trims, and variant, and because of this kind of production, this actually and ironically gives Tesla more options and time as to where to situate a site for assembly.

Whether it be the other tent, or another off-site location like a nearby warehouse where assembled vehicles can be secured, assembly can be done with things like no distracting prying eyes, particularly in the case with the sports car, as everyone wants a hand on them or get in them. Hand assembly also affords to give Tesla more options with assembly times and rates. It’s much easier to do a slower ramp up with vehicles like Semi and Roadster where customers are way fewer, they’ve been on a waitlist for one for an eternity that they can wait a bit longer, and you can focus on quality control better than picking up things frequently missed during assembly when the process is over, some say was a common occurrence at Fremont.

The 10 tractor reservation holder gives us no reason not to believe him, in fact I give him credence, but his given timeline by Tesla may be more about his place in the queue than production postponement. If there are production issues, then Tesla needs to solve those issues with effect and no fanfare, given their past controversies that investors at this stage won’t want to hear about.

What’s most important is that the production tractors look almost exactly and perform at least almost like the prototype tractors. In putting the protos on the road for show to top customers this past summer, Tesla created a mechanism and dynamic for the tractors to immediately blend in right away into Americana and the Tesla brand. The tractors aren’t even in production yet to already have iconic status and brand identity.

The Tesla Semi is more recognizable as the most unique Tesla product than perhaps any one other of their vehicles, perhaps sans the flagship Model S and the halo Roadster. Instagram proves the tractors are celebrities. This past year it was all about when and where the last Semi sighting was on YouTube. At first people for some reason wanted the tractors to fail as one of them stopped on the highway shoulder for a bit, but now it would be a mistake for Tesla to change their design language, or make significant changes to Semi’s design or recognizeability for the sake of efficiencies.

Photo Credits: All pictures of present and future Tesla vehicles except Model U, credited to Tesla Media. Model U render by Kris Horton (www.carsbykris.com) for Truck Trend. These renders were part of a proposal made made in August 2016 by Truck Trend and published by MSN Autos for the upcoming Model U. The renders and the proposal started a discussion in Tesla Forums. See the proposal in the link above for Truck Trend or click here. See the forum discussion here.

What do you think Tesla should be doing moving forward? Let us know below!


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Comments

It's astounding how far Tesla has fallen behind in the EV technology race.
What an odd thing to say. Are you comparing Tesla's current production vehicles with other companies future and proposed vehicles, with their estimates of features and capabilities? From what I can see, the Tesla Model 3 is clearly the best selling EV available today, and it has equal or superior technology and capabilities as any other EV in production, as does the Model S and Model X. The Jaguar iPace is a nice new EV package, but it is a small crossover that is not a match for Tesla's models. Audi and others are soon coming out with mid/full sized EV SUVs, but we will still have to see how they compare when production models get tested in the real world. The Taycan is exciting, but again it is not here yet to compare to Tesla's offerings. I suspect that the Taycan will be an excellent performance car with Porsche's great engineering at work, but I wonder if the Taycan's price will be anywhere near the sub-$80K initial estimates.
That's a very even-handed review Al. Thanks for all the info.
Thank you Dean. Now please go to Facebook. ;)