Tesla Inc. TSLA CEO Elon Musk said on Wednesday that all of the company’s many factories will start producing the new Model Y vehicle starting in February but will lose production in the days of retooling factory.
What Happened: The company will be retooling factories for the start of production and the change will result in several weeks of lost production in the first quarter, Musk said, while adding that margins will be impacted due to idle capacity and other ramp-related costs.
However, these challenges will be overcome once production is ramped, he said.
Tesla launched the updated Model Y first in China earlier this month and in the U.S. a few weeks later. While in the U.S., the vehicle is listed alongside older versions of the vehicle, in China, it replaced the older version.
In both geographies, deliveries are slated to start in March.
Why It Matters: Model Y is Tesla’s best-selling vehicle. The refreshed vehicle’s launch follows the company reporting a fall in vehicle deliveries for the first time in over a decade.
Tesla reported global deliveries of 1.79 million vehicles in 2024, down from full-year deliveries of 1.81 million in 2023.
“…we are not aware of anybody else taking the best-selling car on the planet and updating all factories at the same time,” Musk said about Tesla’s decision to upgrade all its factories simultaneously.
Model Y is manufactured at Tesla’s factory in California, and its gigafactories in Shanghai, Berlin, and Texas
The company on Wednesday warned that it expects operating expenses to increase in 2025 as it seeks to support its "growth initiatives." For the full year 2024, the company reported a total operating expense of $10.37 billion.
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