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Why did Tesla ever build the Model 3. Why not just go straight to Model Y?

Why did Tesla ever build the Model 3. Why not just go straight to Model Y?

I cant currently start a new topic, so this is an edit from another about spam.

Why did Tesla ever produce the M3, when clearly it could have gone straight to the Y?
They forecast twice the demand for the Y. The 3 could be quite a bugbear for them as its sales are cannibalised by its own competitor.

Ross1 | March 16, 2019

15

Ross1 | March 18, 2019

Since this my posting privileges have been curtailed. No longer have a Post New Topic option.

Earl and Nagin ... | March 18, 2019

The 3, like the S, killed all range anxiety and price myths/concerns. The Y now has full reign to enjoy a lot of popularity with better margins and no concern about range.
Go Tesla!

kcheng | March 18, 2019

They chose the least expensive model they could make, a compact sedan. A small SUV/CUV was going to cost more, and if it was X-based and had gull wing doors, forget about it. They made the most logical choice they could.

q1740201 | March 18, 2019

Agree with kcheng. This was a good business decision. First they needed a less expansive model to test their revolutionary production model, it wouldn't have made sense to go straight to the Y. Now Tesla is that much stronger and solid as a company with paradigms that can be used and improved for the Y.
Best,
Quentin from Paris
https://livraisonfleursfrance.fr/

David N | March 18, 2019

Tesla (Elon and Team) has from the very beginning, have had a very well thought out plan at every stage, each stage with a strategic well thought out purpose.
I’d say their plan has been quite remarkably successful.

nothotpocket | March 18, 2019

Great observation, it would have been better to jump right into a Model Y, then release the Model 3 as an affordable option on down the line. Of course, there's more demand than they can keep up with already, so I suppose it doesn't matter in the end :-)

Ross1 | March 19, 2019

Since there is more demand for SUVs and hatches worldwide, I have never understood why the M3 was produced, and I think I speak for millions. The MY would have achieved the goal wiuthout the double angst.
Trying to maintain credibility for M3 in the face of MY is fraught. I hope it will be easy to change the production line of M3 over to MY.
As a Visionary? I forecast MY totally overshadowing M3. If anything were to threaten TSLA, it will be M3 in the face of MY.

Ross1 | March 19, 2019

@DavidN,
I propose EM as the smartest guy on the planet, but... they still make disastrous decisions and choices.
M3 should never have happened. Name me a single real life advantage over the MY?

reed_lewis | March 19, 2019

In the US you are correct that sedans are a smaller market compared to crossovers, and SUVs. But they still sold a bunch of of them and a lot of the world still prefers cars over big SUVs, etc.

I do not think the 3 was a bad idea, but I wish that they had Y coming out in 6 months compared to 18 months.

jimglas | March 19, 2019

I love my M3, not everybody wants a SUV. Maybe I am just old?

RJMIII | March 19, 2019

@jimglas - I must be old too. I bought the Y for my wife, but I'd never drive an SUV/CUV myself. My Model 3 is perfect for my daily 100 mile round trip commute through DC metro traffic.

jordanrichard | March 19, 2019

Well Ross1, clearly there was/is demand for the 3, look at how many sold.

sosmerc | March 19, 2019

IMHO Tesla should have built an F-150 Killer after they did the X. A high dollar model at first just to showcase what they could do without the pressure of having to build millions of them, then slowly expand down into the lower price market at about the time others are finally getting into the business.
My fear is that Tesla will run into trouble because they can't keep up with all of the demand. And that demand isn't just producing vehicles......it involves parts and service and support. Whether they like it or not, they are becoming a "car company" and all the baggage that comes with that. AND, what if the next generation of Americans don't even want to own cars?

Uncle Paul | March 19, 2019

This is pretty much how all companies do it. They first make a 4 door sedan. Then they use that chassis and running gear to spin off all the permutations. Sedan becomes the basis for a more expensive 2 door coupe, a more expensive convertible, a more expensive SUV. Then bring out a high performance version. Gotta start with the basic vehicle, then use that to flesh out the market offerings.

EVRider | March 19, 2019

According to Electrek, Tesla sold almost as many Model S cars as Model X in Q4. Let the facts speak for themselves.

EVRider | March 19, 2019

The data in the Electrek article came from this Tesla press release: http://ir.teslamotors.com/news-releases/news-release-details/tesla-q4-20...

carlk | March 19, 2019

Every main stream auto company built sedans before they built SUV/CUV based on a sedan or of similar size of a sedan, or a truck for truck based SUV. That's just how main stream auto companies, which Tesla is becoming one, do things. Companies like Range Rover or Rivian will stay a truck/SUV company forever.

sosmerc | March 19, 2019

" Companies like Range Rover or Rivian will stay a truck/SUV company forever."

I am not sure about "forever", but I like the idea of companies concentrating on a segment and doing it to the best of their ability. It will be interesting to see how the newcomer Rivian does. They sure look good on paper.

carlk | March 19, 2019

Range Rover is an SUV company. Rivian is a wannabe SUV/truck company with a pretty slim chance of becoming one.

Tesla-David | March 19, 2019

I am with @jimglas, we love our M3 and love it more every day. Lots of M3's up here in Seattle, so it was absolutely no mistake on EM/Tesla's part to produce the M3 before the MY. Using the M3 platform will enable them to produce the MY hopefully with fewer glitches and they also learned a lot with the M3 ramp, which should help the MY ramp.

sosmerc | March 19, 2019

I agree in that Tesla is learning a lot from Model 3 production and it should certainly help with future vehicles.
It is not just production, but there is much work to be done to improve communications, payment systems, service and parts, repair and delivery. It really is amazing how complex the process is and what rapid progress Tesla has made relative to how long the legacy companies have taken. The transportation industry is also changing in ways that we can only imagine. Younger generations may not require car "ownership" as WE old folks know it. I can't imagine not owning a car or truck and the freedom it gives me to go where I want to go and when and more importantly: take with me what I need.

Roger1 | March 19, 2019

Model 3 and Model Y are the same vehicle from a production perspective. Different body and interior parts but no significant difference in chassis and drive system. About 70% commonality between the two models. At a guess, Model 3 and Model Y will go down the same production line. Tesla should be able to switch Model 3 production capacity to Model Y production.

So who cares if Model Y is more popular than Model 3? Tesla will produce whatever is selling. The cannibalization problem is a red herring.

carlk | March 19, 2019

Talk of the demise of sedans is very premature. That GM and Ford are abandoning it is because of their own problems. Camry, Coralla, Accord, Civic were among best selling vehicles for years and they still are. Mercedes, BMW and Audi still rely on sedan sales for most of their business even though everyone is trying to get a piece of the SUV pie now.

TranzNDance | March 19, 2019

Tesla could barely keep up with demand for the 3 but OP suggested that they should have built something that is in greater demand, and have even more people complaining about waiting for the vehicle that they pre ordered three years ago.

TeslaTap.com | March 19, 2019

Jumping into the SUV vs sedan debate, it's less about demand for either one, than that other car makers have figured out that they can charge way more for the SUV (i.e. more profit) than sedans. This pushes all the marketing and advertising into to SUVs to convince people it's the best choice - it certainly is for the automaker. Then you combine that with pedestrian sedan design to appeal to the 80 to dead crowd and it's no wonder sedan sales have dropped off for most automakers.

Tesla has proven with the Model S and 3 that there is plenty of demand for a great looking functional sedan.

Now nothing wrong with buying an SUV, as it clearly fits some owners very well. I feel SUV's success has more to do with automaker's greed than actually utility for many buyers.

Jeff Hudson | March 19, 2019

@Ross1 It might have already been mentioned but the main reason was Tesla's effort to produce an affordable $35,000 EV. While very similar the Model 3 is a little smaller than the Model Y and can be produced for less money. In hindsight this may seem like splitting hairs but we have heard Elon say quite a few times recently that it is painful selling the Model 3 for $35,000 because the margins are razor thin for a relatively new car company but he is doing it because he said he would.

sosmerc | March 19, 2019

Elon's life would have been much easier if he hadn't promised the $35,000 Model 3 as well as the promise of high volumes in a difficult to fulfill timeline. But he continues to march on and set pretty high bars. I guess he enjoys the challenge.

Xerogas | March 19, 2019

@Ross1: Tesla sells outside the US. Isn’t VW Golf a super popular model in Europe? I don’t think CUV is the most popular type of car if you include the world market

El Mirio | March 19, 2019

Model 3 does not have a demand issue, however at one point it might slow down, a hatch back would delay any future slow down.

Ross1 | March 19, 2019

Model S is a hatchback.

Model 3 is a cost saver. Without Elon's motor mouth, they could have used some logic and gone straight to a crossover (MY).
Actually, M3 is a Face Saver for EM. It was not necessary and will be cannibalised by MY.

My household (read: my wife) doesnt like needing a ladder to get into an SUV, but will have nothing but a hatch or wagon. I would think M3 would not be a steep climb up?
As a shareholder I am concerned about the M3 potential redundancy in the face of MY. Waste of time and money speaking financially, even if you do all love your M3. I would too, but I would take an angle grinder to that awful trunk opening. MS was a success with the hatch/liftback. Why not repeat your successes?

Ross1 | March 19, 2019

I would think M3 would not be a steep climb up?

I meant MY

carlk | March 20, 2019

Still don't give up?

Do you know world's best selling non-truck vehicle is notchback Corolla sedan?

carlk | March 20, 2019

Best selling high end vehicle is between BMW 3 series and Mercedes C class.

jimglas | March 20, 2019

go away blizzytroll! flagged

dmm1240 | March 21, 2019

I've often wondered about why the M3 first as well. Technical issues perhaps?

bp | March 21, 2019

It's likely 3 came before Y because it's easier to hit the $35K price point with the 3 than with the slightly larger Y.

Plus, without the experience in ramping up production for the 3, it's likely Tesla wouldn't have been able to build the early Y's at the price point they are planning to hit for the first production Y's.

What's important is that they will have both 3 & Y in or nearly in production as other manufacturers start ramping up their EV sales.

Roger1 | March 21, 2019

@bp, I think you have the best explanation for building the M3 first.

Jillith | March 21, 2019

Just guessing, I think the M3 is the perfect size for the roads in China and Europe.
https://www.inverse.com/article/54243-tesla-model-3-ev-sparks-traffic-li...

Uncle Paul | March 21, 2019

As a bonus, the improvements they will be making on the ModelY over the Model 3 will begin to trickle back to the Model 3, making it an even better and more profitable car.

blue adept | April 11, 2019

@Ross1

>>> "Why did Tesla ever build the Model 3. Why not just go straight to Model Y?"

Because there are more than one personality type/preference in the makeup of the Human species.

Al1 | April 12, 2019

Unlike other car companies that can sell announcements about cars they don't make Tesla needs to actually make cars and sell them too.

It's hard to argue why they chose to sell the car they have rather than the car they don't. Maybe model Y required more time to develop, more capital to invest, and Tesla needed cash sooner.

EVolution | April 12, 2019

to hit the $35k barrier
for 2 months

David N | April 13, 2019

Why 3 and not right to Y?
We all know that small to mid size SUV’s are rising quickly in sales, no question there. So why the 3?
My guess is cost, pure and simple. Even a small 4 Dr sedan will sell, and being the most efficient way to be cost effective to the masses, that’s it. Bring an awesome electric car to the masses at the best price possible. Then when other models are built (Y) the public is so overcome with the tech of the cars, a few thousand more for a Y is an easy decision.
Hey, let’s remember that the “Master Plan” was put together before the small/mid SUV craze took off.
In the end , concerning their “mass market vehicle” , it’s cost, cost, cost.

TeslaTap.com | April 14, 2019

@EVolution - $35K version still available - just not online.

Yodrak. | April 14, 2019

"Name me a single real life advantage over the MY?"

"My guess is cost, pure and simple."
This is my guess also. The Y will be more expensive than the 3. After the fairly expensive S and X, I think Tesla wanted to have the lowest cost vehicle it could produce to get down into a price range where the most customers are. As others have posted, the sedan market may be shrinking but it's still a big market.