What’s Up With Tesla’s New “Tiny Y” & “Tiny 3”?

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I found something surprising and disturbing in this quarter’s Tesla shareholder letter and conference call. Much of the news in recent weeks has been about Tesla reportedly abandoning a low-cost car it was supposed to be working on. That was based on a detailed and persuasive report from Reuters. It was huge news and Tesla’s (NASDAQ:TSLA) stock fell sharply on the news. Elon Musk called Reuters “liars,” but seemed to confirm parts of the report. In Tesla’s shareholder letter, there is no mention of an affordable Tesla car or progress toward one. The only thing that can be attributed to it is the “Next Gen Platform” included in its model table, which shows as “In Development.” It also now shows “Various” for the place of production, instead of Texas or Shanghai or Mexico.

But then, near the beginning of conference callElon Musk said:

“We have updated our list of future vehicles to accelerate the launch of the new model before the start of production mentioned earlier in the second half of 2025. Therefore, we expect it to be as early as 2025, if not at the end of this year. These new vehicles, if they include affordable models, will use next-generation platform features as well as features from our current systems, and will be able to be produced using the same manufacturing methods as our current lineup.Therefore, it is not dependent on any new factory or major new line production – will be done on our current production lines more efficiently. And we think this should allow us to reach more than 3 million vehicles of capacity.

This is what Paul Fosse quickly grasped and inspired him to write this great article: “Tesla Surprises Investors With Bit Y & Bit 3 Soon This Year!”

However, there are a few things of interest to me in how Musk talked about this and how it was included (rarely) in the shareholder letter. So, I wanted to play them out.

First of all, the wording has clearly changed from focusing on a “newer, more affordable model” to a “next-generation platform.” I know both were used in the past, but clearly there has been a drop in emphasis from the former.

Second, instead of talking about a new factory or a production line for this cheap Tesla car, as Tesla had done for several quarters, it is now about using. okay, existing ones production lines. And the features of the current car platform will now be used along with the features of the new platform.

Third, the goal of the acceleration seems to be 3 million cars produced and sold per year, which could be the goal of 2026. The production should start as early as 2025, or even at the end of 2024, but considering the need to increase the speed. production, I think Tesla would not reach its maximum target production capacity until the end of 2026.

Looking at all of this together, here’s what I think happened with the affordable “Model C” (or pick your name) that Tesla was talking about and working on, as well as the next-gen platform in general:

• Tesla execs decided to take a little (or a lot) too much money and time to continue trying to develop a completely new platform and supply chain.
• With sales/consumer demand fading, they also decided they needed a new model sooner than they originally thought – slashing prices, offering various incentives, and sending tons of emails and text messages to owners to try to get them into the new one. Teslas didn’t want to cut it.
• They had a team work on creating a modified platform and future models based on Tesla’s current high-volume models (Model Y and Model 3) that would be more like variations of their current products than something completely new. Again, it was about reducing costs and speeding up the introduction of new models.
• As a result, previous projects were laid off and some employees (up to CTO Drew Baglino) were made redundant. I think Lars Moravy is now leading this new car development. When did this other way start and how far are they? That’s hard to guess. Maybe it was always on the side as an alternative. Maybe it was being tracked and it went better than the “new platform” method. Perhaps it was a response to the late market situation and the decline in Tesla sales that Tesla came up with in late 2023 or even early 2024. Who knows?
• An announcement was included in this shareholder meeting call (even a letter), but Tesla focused more on Tesla Full Self Driving and robotaxis and pulled attention from the topic of new non-robotic models to not raise too many questions. 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 really don’t understand. However, in general, I think it’s good that Tesla has found ways to bring out new models faster and more cheaply. Also, I find Paul’s ideas presented here very interesting, and I look forward to seeing which ones end up being part of Tesla’s new, cheaper models. I also like to rename it to concept cars like “Tiny Y” and “Tiny 3.” Clever! And it lets us get past some of the naming issues we’ve had for a long time with the non-Tesla “Model 2” (which I started creating and spreading as a joke and now a lot of people use) and “Model C” (which I think is most likely the name that Tesla would use it for a small car).

What are your thoughts on all this?