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Tesla’s Model Y dilemma

It’s no wonder Tesla CEO Elon Musk has knocked down stories that the company is planning to refresh its key seller, the Model Y EV, this year. US media reports say that unsold Teslas are so numerous that they can be seen in satellite images from space.

The story emerged at the same time as Tesla’s 8th biggest shareholder, the Norwegian Wealth Fund, said it would vote against the $US56 billion share award to Musk, due to be voted on for a second time at its annual meeting on Thursday.

The EV pioneer is now looking down the barrel of being overtaken by more aggressively run Chinese companies, led by BYD, with a host of European and US rivals (and Honda of Japan) bearing down.

Tesla’s problems are illustrated by stories last weekend that its unsold vehicles surround its factory in Austin, Texas, as well as around a shopping mall in Missouri and in several parking lots in California.

Why the overflow? Well, too many cars produced for too few buyers. Tesla said it produced 433,371 vehicles globally in the first quarter, and of those, 386,810 were sold.

That meant the automaker had 46,561 vehicles it didn’t sell. This can be blamed on the overall EV sales slowdown in the US but not in China and Europe, where electric vehicle sales are holding up.

But the company has put its huge Shanghai car plant in China on short time for May and June, after earlier cutting one day from its 6.5 days weekly operation.

Car rental companies in the US and Europe have been running down their Tesla fleets because of high costs and falling resale prices.

So when reports surfaced at the weekend that Tesla might be revealing an updated Model Y in July, Elon Musk was quick to use his X platform (formerly Twitter) to tell the world that “No Model Y ‘refresh’ is coming out this year.”

Musk’s account on Weibo — China’s equivalent of Twitter — posted the same content in Chinese, aimed at telling potential car buyers not to wait.

Tesla’s current models include the Model 3, Model Y, Model S, Model X, and Cybertruck. The Model 3 and Model Y are locally produced in China; the other Tesla models are not.

Sales of the updated Model 3, or Model 3 Highland, began in China on October 19, 2023, marking the first major update to the EV model, which was originally launched in 2017.

There were reports a year ago that Tesla was planning an update of the Model Y this year, but those stories disappeared amid the weak reaction to the expensive Cybertruck (which was much delayed) as well as the silly argument Musk got into over whether it would launch a Robotaxi in August (still a yes, but no confirmation) and a cheap Tesla – the so-called Model 2 priced around $US25,000 and first promised five years ago.

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