Home / Tech / Tesla expects the Model Y to be more profitable than the Model 3 (TSLA)

Tesla expects the Model Y to be more profitable than the Model 3 (TSLA)

Tesla Model Y

  • Tesla expects its upcoming Model Y SUV to be more profitable than its Model 3 sedan, the electric-car maker said on Wednesday in its second-quarter earnings letter.
  • The company cited shared components and manufacturing designs, a large market for SUVs, and higher expected selling prices as reasons why the Model Y could produce larger profits than the Model 3.
  • Production for the Model Y is expected to begin in fall 2020.
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Tesla expects its upcoming Model Y SUV to be more profitable than its Model 3 sedan, the electric-car maker said on Wednesday in its second-quarter earnings letter.

The company cited shared components and manufacturing designs, a large market for SUVs, and higher expected selling prices as reasons why the Model Y could produce larger profits than the Model 3. Production for the Model Y is expected to begin in the fall next year.

Read more: Tesla’s second-quarter earnings fall short of Wall Street expectations

“Due to a significant overlap of components between Model 3 and Model Y, we are able to leverage existing manufacturing designs in the development of the Model Y production facilities,” Tesla said in the earnings letter.

“Additionally, we are making progress managing Model Y cost with only a minimal cost premium expected over Model 3. Due to the large market size for SUVs, as well as higher ASPs, we believe Model Y will be a more profitable product than the Model 3,” the company added.

The Model Y will have a maximum range of 300 miles and the ability to accelerate from 0 to 60 mph in a minimum of 3.5 seconds, depending on the trim, Tesla said. Like Tesla’s Model X SUV, the Model Y will be able to seat seven people.

During Tesla’s second-quarter earnings call, CEO Elon Musk said the Model 3 and Model Y were more important to the company’s future than its most expensive vehicles, the Model S sedan and Model X SUV.

“There’s probably a bit too much focus on S and X,” Musk said. “The story of Tesla in the future is Model 3 and Model Y.”

Tesla reported a larger-than-expected loss for the second quarter, losing $1.12 per share (versus an expected loss of $0.31 per share) on revenue of $6.35 billion (versus an expected $6.45 billion). The losses came as the company set a record for the number of vehicles delivered in one quarter.

Have you worked for Tesla? Do you have a story to share? Contact this reporter at mmatousek@businessinsider.com.

SEE ALSO: A major Wall Street analyst recently suggested that Tesla is ‘strategically undervalued,’ but is that true?

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