What Is Actually Going On With Tesla’s New “Tiny Y” & “Tiny 3” Approach? – CleanTechnica

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I found something a bit strange and confusing in this quarter’s Tesla shareholder letter and conference call. Much of the news in recent weeks was about Tesla reportedly dropping the lower-cost car it was supposed to be working on. That stemmed from a pretty detailed and convincing report from Reuters. It was clearly huge news and Tesla stock (NASDAQ:TSLA) dropped quite strongly on the news. Elon Musk called Reuters “liars,” but then seemed to confirm portions of the report. In the Tesla shareholder letter, there is no mention of a more affordable Tesla car or progress on getting to one. The only thing potentially tied to it is a “Next Gen Platform” included in its table of models, which it shows as “In development.” It also now shows “Various” for place of production, instead of Texas or Shanghai or Mexico.

But then, near the beginning of the conference call, Elon Musk said this:

“We’ve updated our future vehicle lineup to accelerate the launch of new models ahead of previously mentioned start of production in the second half of 2025. So, we expect it to be more like early 2025, if not late this year. These new vehicles, including more affordable models, will use aspects of the next-generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current lineup. So, it’s not contingent on any new factory or massive new production line — it’ll be made on our current production lines much more efficiently. And we think this should allow us to get to over 3 million vehicles of capacity.”

This is what Paul Fosse quickly latched onto and inspired him to write this great article: “Tesla Surprises Investors With A Tiny Y & A Tiny 3 As Soon As This Year!”

However, there are a few interesting things to me in how Musk talked about this and how it was included (barely) in the shareholder letter. So, I wanted to tease those out.

First of all, the wording has clearly shifted from a focus on “new, more affordable model” to “next gen platform.” I know both were used before, but there’s clearly been a drop in emphasis from the former.

Secondly, instead of talking about a new factory or production line for this more affordable Tesla car, as Tesla had done for several quarters, it’s now about using the same, existing production lines. And aspects of the current vehicle platform will now be used along with aspects of a new platform.

Third, the target with that ramped up seems to be 3 million vehicles produced and sold a year, which would presumably be a target for 2026. Production is supposed to begin in early 2025, or even late 2024, but considering the need to ramp up production, I presume Tesla wouldn’t reach its targeted max production capacity until the end of 2026.

Looking at all of this together, these are things that I think happened with the cheaper “Model C” (or pick your name) that Tesla had been talking about and working on, as well as the next gen platform overall:

• Tesla execs decided it would take a little (or a lot) too much money and time to continue trying to develop a completely new platform and supply chain.
• With a crunch in sales/consumer demand, they also decided that they needed new models sooner than they previously thought — cutting prices, offering a variety of different incentives, and sending tons of emails and text messages to owners to try to get them into new Teslas wasn’t going to cut it.
• They had a team work on creating a modified platform and modified future models based off of Tesla’s current high-volume models (the Model Y and Model 3) that would be more like variations of their current products than some whole new thing. Again, it was about cutting costs and accelerating the introduction of new models.
• Therefore, previous projects were dropped and some staff (all the way up to CTO Drew Baglino) were laid off. I assume Lars Moravy is now heading up this new vehicle development. When this other path started and how far along they are? That’s hard to make any guesses about. Perhaps it was always on the side as an alternative path. Perhaps it was being pursued and went better than a “whole new platform” path. Perhaps it was a late response the market conditions and drooping Tesla sales that Tesla came up with just at the end of 2023 or even in early 2024. Who knows?
• The announcement was slipped into this shareholder conference call (not even the letter), but Tesla put much more focus on Tesla Full Self Driving and robotaxis and pulled attention away from the topic of new non-robotaxi models in order to not bring too much inquiry into how and why the changes were made.

That’s just my reading of the story. And I’m not saying if I think this is better or worse than the previous idea. I think it depends on a lot of details and nuance that I definitely don’t have insight into. However, overall, I think it’s good that Tesla has found ways to bring new models quicker and more cheaply. Also, I find Paul’s ideas presented here to be very interesting, and I look forward to seeing which ones end up being part of new, cheaper Tesla models. I also love his renaming of the concept vehicles as “Tiny Y” and “Tiny 3.” Clever! And gets us past some naming issues we had for a long time with the non-Tesla provided “Model 2” (which I first coined and spread as a joke and now most people use) and “Model C” (which is what I think is more likely to be a name Tesla would use for a compact car).

What are your thoughts on all of this?