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Thursday, 3 August 2017

Finance: Elon Musk made a surprising announcement about Tesla's next car (TSLA)

Tesla CEO Elon Musk is changing course on the Model Y.

Elon Musk says his Model Y strategy change is the result of his executive team taking him back from the "cliffs of insanity."

Tesla CEO Elon Musk made a surprise announcement during Wednesday's second-quarter earnings call.

Musk said Tesla will no longer use an entirely different vehicle architecture to build the Model Y, the compact SUV due to hit the market by 2020. Tesla will instead borrow from the Model 3's platform.

That should make Model Y production a lot easier in the future.

"Upon the counsel of my executive team to reel me back from the cliffs of insanity, the Model Y will, in fact, be using substantial carry over from Model 3 in order to bring it to market faster," Musk said.

During the company's first-quarter earnings call in May, Musk said Tesla would use a vehicle platform different from the Model 3, to build the Model Y.

That could have been a disastrous move.

Major automakers use a single "vehicle architecture" to assemble a family of cars, allowing for more efficient, less costly production. General Motors, for example, uses the same architecture for Chevys, Buicks, GMCs, and Cadillacs.

Before the first-quarter earnings call, many assumed Tesla would rely on the Model 3's vehicle platform to build future Tesla vehicles, the first being the Model Y.

Considering Tesla's past production challenges, it follows suit that Tesla would want to streamline things as much as possible.

Musk made it very clear on the earnings call that his executive team advised him to change course, though it's still unclear how much Tesla will borrow from the Model 3. Musk didn't say it will be the exact same vehicle platform as the Model 3.

"I have to thank my executive team for stopping me from being a fool," Musk said. "Model Y will have relatively low technical and production risk as a result."



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