On Thursday night, Elon Musk introduced the Model Y, Tesla’s new crossover SUV, in an amateurish, tongue-in-cheek presentation. Much like Steve Jobs used to in his Apple keynotes of days gone by, Musk took an off-the-cuff approach to the big reveal. He even cracked a few self-aware jokes, calling the Tesla fleet of vehicles “semi-sexy” as he worked his way through the company’s history.
The event seemed to satisfy attendees – many of whom identify as self-proclaimed Musk cultists – but once the new vehicle’s specs hit the presses, the reception was wasn’t nearly as warm. Investors in particular seemed unhappy with Tesla’s reveal, as they drove-down TSLA shares 5% as of this morning.
Industry analysts piled on as well after the Model Y’s underwhelming premiere, like Wall Street firm researcher Garrett Nelson, who said that “we thought the unveiling was a disappointment and are seeing a classic ‘sell the news’ situation this morning.”
Many investors saw the Model Y as a potential watershed moment for Tesla – a company that (until now) didn’t have a vehicle to compete in America’s extremely hot SUV market. But based on this morning’s reaction alone, it looks like Musk’s new toy didn’t win over high-end consumers – something the Model Y must do in order to claim some desperately needed market share.
The Model 3, Tesla’s flagship vehicle, is still set to be the cheapest car in the Tesla lineup, as the Model Y will cost anywhere from $39,000 – $60,000 depending on the different upgrade packages available. The Y is about 10% bigger than the 3, and features a stunning panoramic glass roof, which aims to give drivers the convertible experience without having the windblown hairdos.
But investors didn’t seem to take any issue with the car’s design itself, nor any of its features, like the infamous self-driving system that can be added (for a price, of course) to any Tesla vehicle.
The crux of today’s TSLA dip lies in the production rollout schedule, which currently has the base-level ($39,000) Model Y set for release in the Spring of 2021, a little over two years from now.
Tesla bulls are worried that if Musk waits too long to get his SUV in garages all across America, other automakers will beat him to the punch with their own electric crossover offerings.
“Tesla is going to face significantly increased EV competition starting with the 2021 model year vehicle, which will be available starting in the spring of 2020,” said Nelson.
Car manufacturers running the gamut from Ford to Ferrari are all in the process of developing electric cars – many of which will likely debut before 2021. By showing their hand two years in advance, Tesla may have provided the competition with some picture-perfect bulletin board material.
But despite the bad press – something Musk is extremely comfortable with at this point – Wall Street analysts who actually got behind the wheel of the Model Y had glowing reviews, like Wedbush’s Dan Ives:
“As we had the opportunity to test drive the car, we were very impressed with the interior and feel of the Model Y on the road as it did not drive like a crossover SUV,” he said in a Friday research note, highlighting one of the major competitive advantages (handling) that the Y could enjoy.
But in addition to Ives’s praise, his commentary also revealed just how fickle people can be – investors and reporters included.
Damning headlines came out last night as well as this morning, condemning the Model Y as a failure two years before the vehicle hits the road. None of the people have actually driven the car yet, and those who had the rare opportunity to have only said good things about it.
If anything, today’s coverage on the Model Y has done nothing to convince me that the car will flop (something many analysts have already concluded), but rather that people close to the industry simply want to see Musk fail.
Supporters of his, of course, lapped up every word at the Model Y’s chic debut, but outside of them, it’s been nothing but negativity – even as the Model 3 continues to show healthy sales figures.
From everything we’ve seen, there’s no reason to believe that the Model Y can’t achieve the same success, even with competing automakers churning out their own electric cars. Tesla has been in the game the longest, and if I’m placing my bets on which company is going to produce the best electric crossover, I’m picking the one that’s been the key innovator for EV (electric vehicles) since 2008 – even if their CEO makes provocative tweets from time to time.
