Tesla started work on the Model 3 first before it was clear sedans were in terminal decline in North America. Worldwide they sell better than in North America. If Tesla had known that sedans were dying in the US, they might have killed the Model 3 and went directly to the Y, but by the time it was clear the sedan was dying, the Model 3 was well along and they couldn't afford to kill the program.
The Y will be built on the 3 platform. It won't be a small CUV, more a mid-sized. Mercedes might beat Tesla to market, but if the recent track record of other European car makers is any guide, it will be available in small numbers, at high prices, with dismal range despite a large battery pack. The iPace is probably about the size of the Model Y.
It will probably be popular with those who want the luxury of a Mercedes, but that's a limited market. The success of the Model S in the luxury niche showed there were a lot of people out there who could afford a Mercedes or BMW, but drove something much more humble until something they really wanted (the S) came along.
I have been saying since the Model 3 was announced that the real competition for the 3 (what it will be cross shopped against) won't be the Bolt, or Leaf, or the BMW 3 Series, it will be the Camry, Corolla, and Accord. Data released by Tesla last year showed that a lot of Accords, Corollas, and Civics were turned in for Model 3s. The Model Y will put a similar dent in the mid-sized family CUV market.
Ultimately Tesla is gunning for the family car market. That's where the real volumes are.
Yes, I ordered online, but only after a store visit and two test drives, one with a forum member.
I think it's to shut up the critics. Or at least try to shut them up.
As
@neroden said above, we knew there was going to be a post incentive hangover, and this quarter is usually the lowest volume of the year. Demand may be softening a little, but I'm not surprised at the price cuts.
The Model 3 is being rolled out right now in the right hand drive international market and there is a fair bit of demand there to fill. Europeans have been saying the M3 is a better size for Europe and sedans are still more popular there than they are in North America. I think North American sales are going to be poor this year, but China and European sales should be close in strength to US sales last year.
By the time the demand for the M3 begins to saturate, the MY will be going into production. I would not be surprised if Tesla decides to convert 1 or more lines at the main factory to making MYs if demand for the Y is much more than the 3. The two cars will probably share more parts than the S and X did which would help retooling lines to make one or the other.
Another thing Tesla could do to spur demand for the S and 3 if sedan sales continue to decline is redesign the backend and offer a wagon version, or what the British call a shooting brake. Someone in the UK redid a Model S with a fiberglass shell to make it a wagon and the car became much more practical for hauling. It also had the added benefit of better backseat headroom. A factory option with a wagon version would not be as popular in North America, but would probably sell in other parts of the world where the wagon doesn't have the stigma the wagon has here. And it might catch on here with a niche like the Subaru Outback.
I am a bit concerned about Tesla's future. They really need a COO who can capture the essence of Elon's ideas and make them work effectively. Throughout its history Tesla has lurched from one crisis to another and there is nobody high up looking ahead and trying to anticipate and avoid the crisis before they happen.
My SO who has developed ADD as an adult (adverse reaction to Versed) and has self taught herself a lot about it convinced Elon has ADD. From what she's told me of the symptoms, I think she's right. That's why the cars and his office are so spartan. Many people with ADD and drive to succeed end up creating very spartan spaces for themselves to eliminate sources of distraction. He also seems to be time blind, another possible symptom. The inability to manage to see crisis coming and make plans to avoid them is one I've seen first hand. There is an ability to spot crisis points, and an awareness that something could become a problem, but once the plan is engaged so much effort goes into just getting to the next step that the crisis becomes "tomorrow's problem".
Tim Cook at Apple was the COO who captured and smoothed out the crisis at Apple as Steve Jobs spazzed out about whatever the latest project was. Cook didn't have Jobs' vision, but he did have the organizational skills to make sure things happened with few mishaps.
SpaceX is a bit of an apples and oranges comparison to Tesla because it's not publicly held, they don't mass produce anything, and their mission is different, but Gwynne Shotwell keeps everything running smoothly, or as smoothly as possible for a company with Elon at the helm. If Tesla had someone like Shotwell or Cook who Elon could trust enough to do their job, the company would be much more efficient and not known for chaos.
Logistics is way underrated and its far from sexy, but ultimately logistics can make or break any endeavor.
