Elon Musk shoots down U.S. regulator's complaint about his Tesla tweet

Tesla Should Not Have Lowered the Price of Autopilot Says Musk

Lawyers for Elon Musk have issued a defense of the Tesla CEO's tweet on February 19th, 2019 against the SEC complaint that the tweet violated the terms of Musk's earlier settlement with the regulator. The company expects to build closer to 400,000 cars this year.

The decision to close down all of its retail stores and move to an online-only sales model surprised numerous company's employees and investors, with some investors dumping the company's shares as its "growth" aura was rapidly deflating.

Model Y. Image source: Tesla.

When announcing the Model Y's premiere date on Twitter, Musk took the time to suggest that the SUV will be about 10 per cent larger than the Model 3 and also cost around 10 per cent more. On the company's website, Tesla says it will livestream the unveiling at 8 p.m. PDT. It's partially backtracking on a plan to move to an online-only sales model, it's dealing with skepticism regarding consumer demand, and its charismatic CEO Elon Musk is, once again, in trouble with regulators over his tweeting habits. From what we can tell, much of the front fascia will resemble the Model 3, while the overall shape will echo that of the Model X, albeit on a smaller scale.

According to a series of tweets from Musk himself, the Model Y will be an SUV "about 10% bigger than Model 3".

First and foremost, the Model Y will be based on the same platform as the Model 3 sedan. Evidently, common sense prevailed and Tesla made a decision to drastically cut down on development and production costs of the Model Y by using one of its existing platforms.

Tesla has enormous expectations for its Model Y. Citing the fact that the midsized SUV segment is the most popular vehicle type in numerous major markets Tesla operates in, Musk believes the Model Y will be produced in higher volumes than the Model 3, he said during the company's fourth-quarter earnings call.

Tesla's struggle to produce enough Model 3 sedans in 2018 could be alleviated by both the expansion of its current Fremont, California manufacturing facility and the addition of a new "Gigafactory" to build vehicles more affordably for its overseas customers.

Tesla has undergone multiple rounds of layoffs in the past year. While the electric-car maker has always planned to lower Model 3 prices in order to hit its target $35,000 starting price for the vehicle, aggressive price cuts to all of its models and a workforce reduction announced earlier this year have some investors anxious that demand isn't living up to the company's expectations.

As part of Tesla's move to base the Model Y on the Model 3, the two vehicles will apparently share some 75 per cent of their components.

Daniel Sparks owns shares of Tesla. The Motley Fool has a disclosure policy.

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