Tesla’s new Model Y compact SUV to lead ambitious range expansion plans

Tesla Inc — newly renamed after nearly 13 years as Tesla Motors Inc — is on the verge of what it says will be a massive expansion of production, with two new models due to arrive in the next two years.

As well as the much-hyped compact Model 3, Tesla is also expected to launch a compact crossover based on the same platform. The rumoured Model Y will, like the Model 3, be far more affordable than Tesla’s current offerings.

The starting price of the Model 3 is likely to be around $37,000 (Rs 23.37 lakh), with the Model Y expected to be slightly more expensive. However, Tesla founder Elon Musk thinks the transaction prices of the new compact Teslas will be rather higher, at around £34,000 (Rs 21.47 lakh) for the Model 3 and perhaps £37,000 for the Model Y, because buyers will be keen to add cost options to their vehicles.

While the compact Model Y could turn out to be Tesla’s best seller – some seven million crossovers of all types were sold in the US last year – Musk recently tweeted that the Model 3 remained the biggest priority for the company.

The Model Y is unlikely to be unveiled until sometime next year, with production set to follow late in the year. Little in the way of specification has been released, but it’s likely to have the same top-hinged ‘falcon wing’ rear doors as the bigger Model X SUV.

The Model Y will also have the promised updated electrical architecture that will allow Tesla to offer full autonomous driving capability. Future Tesla cars will be equipped with as many as eight cameras, giving a 360deg view of the surrounding roadscape, as well as 12 ultrasonic sensors and an unspecified ‘new’ forward-facing radar that works in the worst conditions. Existing radar systems can be fooled by heavy rain and fog.

Musk also said the new electrical architecture has a brain that is as much as “40 times” more powerful than on previous Teslas, calling it a “supercomputer inside the car”. The cost of adding the fully autonomous driving technology to the Model 3 and Y is likely to be nearly £7,000 (Rs 689,000) for each customer. Even then, local regulations could prevent all of the autonomous features being used by all drivers.

Another challenge for the Model 3 and Y will be balancing their lower price against the need for a battery big enough to give an acceptable range.

The entry-level Model 3 may have a cheaper, sub-60kWh battery but will still need to have a range of at least 230 miles/368 kilometres. The Model Y’s more bluff shape and greater frontal area might mean a bigger battery for the same range, and so a slight price premium.

Tesla is in a race against time to achieve the kind of production levels needed to turn around what is still a cash-hungry operation. The firm has spent nearly $2 billion (Rs 12,634 crore) since 2010, with investments including building the battery-making Gigafactory and trying to expand car production to a massive 500,000 units a year.

Tesla delivered around 76,000 vehicles last year, but says it was able to build around 2000 cars per week by the second half of 2016. With as many as 400,000 deposits taken for the Model 3, the company is looking to produce well over 100,000 of the rival before the end of this year. Musk predicts Tesla should be capable of building 500,000 cars per year by 2019.

Musk’s expansion plans will test the limits of the capabilities of Tesla’s suppliers and those of his own plant in Freemont, California. But getting to annual sales of half a million vehicles should finally push the car maker into profit and secure the company’s long-term future.