March 15, 2019 / 4:08 AM / 2 months ago

UPDATE 2-Tesla unveils Model Y as electric vehicle race heats up, price starts at $39,000

 (Adds color, quote, detail from event)
    By Alexandria Sage
    SAN FRANCISCO, March 14 (Reuters) - Tesla Inc         
unveiled its Model Y electric sports utility vehicle on Thursday
evening in California, promising a much-awaited crossover that
will face competition from European car makers rolling out their
own electric rivals.
    Chief Executive Elon Musk said the compact SUV, built on the
same platform as the Model 3, would first debut in a long-range
version with a range of 300 miles (482 km) priced at $47,000. 
    A standard version, to be available sometime in 2021, would
cost $39,000, with a 230-mile range. The vehicles can be
configured to include 7 seats for an additional $3,000.
    After the event, Tesla's website included a page to "design
and order" the more expensive, long range version of the vehicle
with rear-wheel drive, available next year. Ordering the car
requires a $2,500 refundable deposit.
    Musk unveiled the vehicle at a short 40-minute event at
Tesla's design studio in Hawthorne, outside Los Angeles, that
was streamed live online. (
    Each of Tesla's vehicles, from the Roadster to the latest
Semi, were driven onstage before the blue Model Y appeared.
    Small SUVs are the fastest-growing segment in the United
States and China, the world's largest auto market, where Tesla
is building a factory, making the Model Y well positioned to tap
    Tesla has enjoyed little competition thus far for its
sedans, but competition for electric SUVs is heating up as Tesla
tries to master a new set of economics from the luxury line that
made its reputation. 
    On Thursday, ratings company Fitch warned that, despite
Tesla's early lead, "incumbent carmakers have the ability to
catch up ... thanks to their capacity to invest and their robust
record in product management."
    Tesla's targeted volume production date of late 2020 for the
Model Y would put it behind electric SUV offerings from
Volkswagen AG's             Audi, Daimler AG's           
Mercedes-Benz and BMW          .
    "Twelve months from now we will have made about 1 million
vehicles," Musk said at the event, without specifying the
breakdown of models.
    Shares of Tesla are down 24 percent from an August high of
$379.57, when Musk tweeted that he was taking Tesla private. 
    That plan - later scrapped - ushered in a period of turmoil
at the company, from Musk's public battles with regulators, a
flurry of securities lawsuits, cost cutting and layoffs.
    Tesla, two weeks ago, said it would close most stores and
use savings to cut the price of most cars by 6 percent. But last
week, Tesla reversed course and said it would leave many stores
open and raised prices back by about 3 percent.             
    Musk has promised an easier production ramp of the Model Y
as it shares about three-quarters of its parts with the Model 3
and would need only half the capital expenditures of the sedan.
    The risk is "quite low" Musk told analysts in January. Tesla
would "most likely" build the Model Y at Tesla's battery factory
in Nevada, he said at the time. Musk gave no new details about
where the Model Y would be produced at Thursday's event. 
    Still, the Model Y, like all Tesla models, has already seen
pre-production delays. Suppliers were originally told production
would start in November 2019, sources told Reuters last year.   
    In October, Musk said "significant progress" had been made
on the Model Y and that he had approved the prototype for
production in 2020. In January, he said Tesla had ordered the
tooling needed to build the car.

 (Reporting by Alexandria Sage; Editing by Peter Henderson, Greg
Mitchell and Lisa Shumaker; Editing by Himani Sarkar)
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