Market reaction to Model Y unveil

[drj3]

TSLA stock has gone down after the unveiling of the Model Y. The little bit of commentary I've looked at speculates that investors were "underwhelmed" by the unveiling. I agree that the presentation itself lacked showmanship and focus on the Model Y (only a brief drive it out at the end and a quick overview of the stats). However the fact that the car is mostly just a larger version of the Model 3 is a great thing for the company and shareholders. Having a large quantity of identical parts improves economies of scale, makes stocking repair parts easier and makes training the service team easier. Also it means that there is far less risk of problems in scaling up production. Most of the needed parts are already being produced in quantity. No need to develop new tooling and production methods, just adjust production to meet demand. The Model 3 had a huge impact on the sedan market. Now Tesla is poised to enter the much larger mass market crossover segment with a car that has much lower risks in the production ramp and is based on a car that is a proven winner in the sedan market. Big surprises and jaw dropping new features are exciting and great for getting attention, but lead the company and investors deep into the pits of production hell when it is time to produce them.

 

[Seesaw]

Love the Model Y, but it will definately cannabilise sales from the 3.

Probably should of been more superficial changes like wheels and lights to appeal to different buyers.