March 15th, 2019 by Paul Fosse
At the Tesla Model Y reveal event, I was focused on 2 things. First that it not be hard to manufacture. Second that it have 3 rows of seating.
Easy To Manufacture
To be easy to manufacture, Tesla needed to not introduce any hard-to-manufacture features, like the falcon-wing doors of the Model X. Not a lot has to be said about that. It is obvious from looking at the car and riding in the car that it is very, very similar to the Model 3 (which I own). The battery and motors are likely to be the same, the steering wheel and 15 inch screen and software appear to be the same (with minor modifications). The radio and climate controls appear to be the same. The Autopilot hardware appears to be the same.
I was told on the test rides that the front 5 seats were the same as the Model 3, with different mounting hardware to raise them. Even parts that are clearly different, like the front fenders and doors (because the dimensions are different), look the same to the casual observer.
It was stated on a previous call that the Model Y and Model 3 share ~76% of their parts. It appears the 24% of the parts that are unique to the Model Y are not very different. For example, the doors are clearly different in size, but they aren’t different in style. This greatly reduces the chance of the Model Y sending the company into manufacturing hell. It also means it is very likely that Tesla can manufacture the 2 cars on the same manufacturing line if they choose to do that. That would allow them to easily react to changes in relative demand between the Model 3 and Model Y. They may have separate lines in the US, just because there is probably no room to manufacture more cars in the Tesla Fremont factory, but in China and in future gigafactories, Tesla may choose to share portions of the manufacturing line or maybe the whole manufacturing line.
Why Tesla Had To Include 3 Rows Of Seating
Why do I think having 3 rows of seating is so important to the Model Y? Look at all of the other vehicle manufacturers that Tesla competes with. Ford, GM, Toyota, Honda, Nissan, BMW, Mercedes-Benz, Lexus, and Volkswagen. How many different vehicle models do each of them manufacture, if you include their US operations, European factories, and Asian and Latin American operations? I would guess that the larger companies (such as the 5 listed above) make close to a 100 different vehicle models, and the smaller brands luxury brands like Lexus and BMW make at least 20 or 30 different cars and SUVs.
Tesla only makes 4 vehicle models now (and of course it doesn’t even make the Model Y yet), and will be adding the pickup and Roadster in a couple years following the Model Y’s commercial release. The company will also be adding a smaller, cheaper car or crossover a couple of years after that if all goes as planned. So, for the next 3 or 4 years, Tesla will have about 7 models.
Elon stated on a recent podcast with ARK Invest that he guesses they will make about a million cars in 2021 (the S, 3, X, Y, and Roadster should be in full production) and about 3 million vehicles a year in 2023 (the pickup and perhaps a cheaper car should be in production). Tesla wants to become one of the largest vehicle manufacturers in the world, yet it is obvious that it isn’t going to design another 95 vehicles in the next year or two. So, each vehicle that Tesla creates needs to serve a wide market. It appears Tesla has settled on 4 main versions of the Model 3 and Model Y.
- Value model with competitive range
- Long Range model with industry-leading range and better performance
- All Wheel Drive model with even better performance
- Performance model with mind-blowing performance at an reasonable price
Comparing The Tesla Model Y To Toyota & Lexus SUVs
The Model Y value model will be competitive with the C-HR and RAV4. The Long Range and AWD models will be competitive with the Highlander and the 4Runner. It is just too small to compete with the Sequoia or Land Cruiser. Toyota doesn’t have an SUV that is competitive with the Model Y Performance, so with the versions of the Model Y announced, Tesla competes very with all the versions of the four Toyota vehicles.
Comparing the Model Y to the Lexus lineup, the value model will line up against the UX and the NX. The Long Range and AWD models will compete with the RX and the GX. Once again, Lexus doesn’t have anything remotely competitive with the Model Y Performance.
So, this example shows how with 3 versions of a single car (based on an existing model), Tesla covered for different Toyota SUVs and 4 different Lexus SUVs and also produced a performance model that is about twice the acceleration of any of the Toyota and Lexus SUVs, so it will cut strongly into the many performance cars the two brands make.
You can see how Tesla saves a huge amount of money designing so many different cars — it designs one car to be incredibly good and then uses it to compete with hundreds of other cars.
Why Consumers Want 3 Rows Of Seating
I have 3 kids (my youngest is 19) and know many other parents with 2 or 3 kids. Why do you need seating for 7 when a 5 seater can cover the whole family? Two answers are obvious to me.
First of all, to keep my kids from killing each other. When I transported my 3 kids on a longer trip, they would get grumpy, so I put one in the front seat, one in the 2nd row and one is the 3rd row. With each kid in a different row, they fought a lot less.
The second reason is to transport a lot of kids to school or sports or whatever in a carpool. Most families have two working parents and if one parent can take 6 kids to school in their car, that is a really good thing. I helped organize many carpools and we loved parents who had cars that could hold more kids. I did some carpooling in my Nissan Leaf, but sometimes we had to send two cars to pick up all the kids we had to get back home. When we used our Honda Odyssey with seating for 8, we could always get all the kids in the car without sending two cars.
Model Y 3rd Row
They didn’t let us ride in the 3rd row at the unveiling event, but I did get a quick look at it and it is rather small. I would say it should be competitive with other midsized SUVs like the Toyota Highlander, but not even close to as comfortable as large SUVs like the Sequoia or a minivan’s 3rd row.
I got a chance to talk to Franz von Holzhausen about the 3rd row. I told him that I felt it was an important feature that was crucial to the success of the Model Y. I asked him two specific questions about the seating. I asked if the second row was adjustable so the people in the 3rd row could have more room (I wanted to confirm what I had heard from the Model Y driver). I also asked if he had designed them so they would be able to hold child safety seats. The answer was yes to both questions. Although I would have liked more details, Franz was very busy and I am thankful that he had time for those two questions. He probably had to be careful about what he said as well.
I’m happy that my two biggest concerns were resolved in the unveil. Had the Model Y been a radical departure from the Model 3, it would have been another “bet the company” project. I am confident that it is simple enough that Elon can delegate a little more responsibility and not feel the need to get involved in a lot of the rollout of the car. Although I think Elon’s input is valuable, it is taking a heavy toll on his life and he can’t work 120 hours a week for long without many bad things happening.
The Model Y could be a huge success without the 3rd row seating, but it would have left a huge gap of people who needed more seating but could never afford the Model X. Tesla would be leaving millions of potential sales on the table for many years until they could design a vehicle between the Model Y and the Model X. The room you can create in such a small crossover is a testament to the wisdom of designing an electric car to be electric from day one and not trying to shoehorn an electric powertrain into a vehicle designed for a gas or diesel powertrain.
A couple days ago I looked up the best selling vehicles in the world and it looks like it goes back and forth between the Toyota Corolla and the Ford F-150 at about a million vehicles a year. With the Tesla’s ability to be competitive with hundreds of other crossovers in all the world’s markets and Tesla’s plans to expand the Gigafactory 1 and 3 to produce about a million cars a year, it looks like Tesla has a chance to make the Model Y the best selling car in the world, at least until their cheaper “Model 2” addressing an even larger target market overtakes it.
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