Last night Tesla announced that the Model Y would be available in 2020. This morning we published a note indicating that the timing of Model Y was later than we expected. We also said, “This timing likely implies the company is postponing the costly Model Y ramp in 2019 to conserve cash,” which was incorrect.

Tesla’s public comments have always called for “volume production in 2020,” so last night’s announcement is in line with their previous commentary. We had expected some early units to be available in 2019 (see here), but the company’s message regarding 2020 availability has been consistent.

• The company is investing in 2019 for Model Y production starting in 2020. If the company was in need of cash, they would not be aggressively investing in expanded production in 2019.
• We continue to believe that Tesla will likely raise cash in 2019. While a raise would be viewed as negative in the near term, it would be positive in the long term, potentially putting to rest longer-term investor cash concerns.
• In other words, we think it’s the right strategy for Tesla to raise money to fund what we view as the best product roadmap in tech around EVs, autonomy, and renewable energy. We continue to believe Tesla will be a winner in capturing this next wave.

The key takeaway from last night’s event is largely being lost in today’s news. Model Y represents the most compelling value in electric mid-sized SUVs. The main competition in the next several years (Audi e-tron, Jaguar I-Pace, Mercedes EQC) will start above $70k, or $30k more expensive than the Model Y.

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