Recently the news came out that Tesla’s valuation is approaching that of Nissan, a car manufacturer that has been around for decades. What was so surprising about the valuation was the fact that Tesla only really has two cars, the Model X and the Model S, both of which have a long waiting list. What’s more, Nissan pumps out more than a million cars a year, whereas Tesla managed around 70,000 last year.
Tesla’s valuation by investors clearly has nothing to do with its current productive capacity. People who put their money into Tesla are doing so because they believe that the manufacturer has the potential to succeed in the long term. In many ways, Tesla is like a nascent Apple in the 1980s: lots of promise and lots of risks. But if investors are right and electric really is the future, then they’ll make a massive return.
The company has already said that it is trying to fit out its plants in Fremont for a new mass-production car, the Model 3, to supplement its current executive range. But now the company has indicated that it will be expanding its line even more with the hitherto unheard of Model Y.
Whereas the Model 3 is being targeted as an affordable city saloon car, the Model Y will be a crossover. It’s expected to be slightly pricier than the Model 3 at around $37,000 (rather than $34,000), but that’s still a lot cheaper than the Model S which starts at $70,000 for the most basic model. Elon Musk, the CEO of Tesla, says that the new Model Y will provide much-needed Tesla competition in the crossover market, and it could be more popular than the Model 3, purely because of the overall popularity of crossovers.
Given our experience of the Model X, it’s unlikely that Tesla will be able to deliver large quantities of the Model Y, especially as the company is trying to ramp up the production of the Model 3 to 500,000 cars per year over the next two years. But let’s hope that the Model Y is a simpler car than the Model X and time isn’t wasted trying to perfect “falcon doors” – something that wasted a lot of time on Tesla’s SUV.
Musk has said that the Model Y will have a supercomputer at its core, making millions of driving decisions per second. It’s the strongest suggestion yet that the car will have advanced autonomous options and perhaps full autonomy in countries that allow it. Currently millions of Americans have to seek a DUI lawyer if they’re pulled over by police for suspected drink driving. But an autonomous Model Y could eliminate this problem for good. Not only is Musk delivering technology that’s cool, but he’s also making it safer to drive on the roads.
Building the new Model Y is a massive undertaking for a company already trying to scale more rapidly than any car manufacturer in history. If the Model Y is as successful in its segment as the Model S has been, then Tesla will become one of the biggest car manufacturers in the world.