The Model Y may be Tesla’s most disruptive vehicle yet, and this will likely be evident in Europe, where crossover sales are expected to increase in the coming years. Tesla’s Giga Berlin is estimated to go online in July 2021 and it will start with the production of the Model Y. Looking at the target timeframes for the facility, Elon Musk’s electric car company seems to have timed the rollout of the crossover perfectly to make most of its potential the region.
The Silicon Valley-based carmaker continues its progress in Grunheide. Just this week, the state government announced that there’s enough water for the upcoming car factory and reassured local residents, businesses, and concerned environmental groups that Tesla will not compromise their water supply. The state parliament is also waiting for the second appraisal of the industrial property where Giga Berlin will be built. Once that review is done, the purchase is expected to be completed and that’s practically a green light for full construction activities to begin.
While Tesla will get busy this year in building Giga Berlin from the ground up, LMC Automotive believes the sales of compact SUVs in the region will be flat. The automotive forecasting firm predicts that sales in the segment will just hit the 2 million mark as car manufacturers transition from older vehicles to EVs. Just as Giga Berlin turns its gears to mass-produce the Model Y, LMC expects an uptick in crossover sales to 2.1 million units per year, rising to about 2.8 million by the mid-2020s.
In the first 11 months of 2019, JATO Dynamics plotted an increase in compact SUV sales in several European countries such as Germany (12%), the UK (6.2%), France (4.3%), Italy (1.7 percent), and Spain (5.2%), but this trend might be disrupted this year as carmakers introduce new vehicles designed to meet tougher European emissions requirements.
The effectivity of the tough emission regulations started Jan. 1 this year. New vehicles are expected to spew out lesser carbon dioxide or to be more precise, about 95 grams of CO2 on average per kilometer by 2021. If automotive manufacturers fail to meet this standard, they can expect hefty fines that overall may reach billions of dollars. Europe’s car industry may not be fully prepared for this. Even German car giants such as Volkswagen are struggling to keep up.
The star of the show will be green vehicles, particularly all-electric cars. Tesla does not have the weight of fuel-guzzling vehicles in its fleet, and it also has the Model 3 that drove the EV market growth in Europe by becoming the third best-selling model last December 2019. With the Model Y estimated to start rolling out from Giga Berlin by 2021, Tesla will be able to meet the predicted demand for compact SUVs, which, according to estimates, will be higher then. This could result in the all-electric crossover seeing a lot of success in the European market.
Between now and when the Germany-made Model Y hits the market, Tesla would be in a good position to make use of “advanced manufacturing technologies” and “battery technologies that can blow people’s minds.” Such factors may increase production, lower the cost of vehicles, and increase profit margins. All these three can be utilized for Tesla’s Model Y push.
In a way, Germany is already laying a path for the arrival of compelling all-electric crossover SUVs. The German government is encouraging consumers to buy electric cars using purchase grants and ownership tax exemption for 10 years. The country also halved its company car taxes, and has introduced perks such as free parking and the use of bus lanes, among others.
All Tesla has to do is make sure it produces enough units of the Model Y to meet the demand in the region. Unlike its competitors, Tesla makes pure EVs, so the CO2 emission of its fleet will meet regulations. It’s years ahead in terms of battery technologies that are practically the lifeblood of the EV industry as well. Before competitors catch up, Tesla would be in another position that will make legacy carmakers scratch their heads.
Fortunately for Tesla, the Model Y is the product of years’ worth of innovations in vehicle production, including the painful growing pains that the electric car maker experienced with the Model 3. Details about the Model Y’s production process are few for now, though speculations are abounding that the crossover will adopt a number of design elements that will make it simple and cost-effective to produce. This matters a lot, since the Model Y will be priced higher than the Model 3 sedan, giving Tesla more profits .
The Model Y does not just complete the S3XY vehicles of Tesla but it will be a juggernaut, that like the Model 3, will disrupt the automotive industry. As Germany’s and the rest of Europe’s air get cleaner and cleaner in the near future, Tesla’s coffers will likely be filled with some healthy profits.
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