Tesla's (TSLA) New SUV May Launch in 2022

SUV Model Y has range of 279 miles per charge and all-wheel-drive powertrain

Tesla, Inc.'s (TSLA) new addition to its Model Y fleet line may be an SUV with an all-wheel-drive (AWD) powertrain and a range of 279 miles for a single charge on 123 miles per gallon equivalent (MPGe). Since the model, called simply the Model Y AWD, appeared on the Environmental Protection Agency (EPA) website, it seems to have been cleared with the EPA's Certificate of Conformity.

The move is being seen as an opportunistic one as soaring gas prices are driving demand for e-vehicles and Tesla and its competitors seek to ramp up their capacity to match it. Yet the challenges from inflationary pressure that is driving up the price of metals make the near-term outlook unclear for electric vehicle (EV) manufacturers as a whole.

Key Takeaways

  • Tesla's Model Y SUV with a 279-mile range has been cleared by the Environment Protection Agency.
  • Tesla cars are selling at a higher price due to inflation and supply chain constraints.
  • As gasoline prices soar, production may need to ramp up quickly to meet EV demand.
  • Gigafest in Austin, Texas, should unveil the latest developments in battery, range, and performance.

Model Y AWD and the LFP Strategy

Tesla's older versions, the Model Y Long Range and the Model Y Performance, deliver 330 miles on 122 MPGe and 303 miles on 111 MPGe, respectively. While it is not clear yet whether the new version will carry the lithium-iron-phosphate (LFP) cell rather than the 4680 and structural battery pack, its range indicates lower battery capacity than the Long Range Model Y.

The decision to transition to LFP, which comes with a lower range of 253 miles per single charge and which has been in use in Asia and Europe since 2020, was made in August 2021 as Tesla tried to keep up with orders for its Model 3 in North America despite a shortage in mined nickel. In a tweet in February 2021, Tesla CEO Elon Musk announced that standard range cars would be fitted with LFP batteries. From a price point of view, LFPs on the AWD vehicle could potentially bring the cost down, although the 4680s would be cheaper, cleaner, and provide more range when they eventually come out.

War, Inflation, and Metals

The Russia-Ukraine war has led to inflationary pressure and a price hike for metals that is affecting Tesla. Tesla cars have seen price hikes all over the world as a direct result of the war and lingering supply chain problems. In a tweet, Musk cited inflationary pressure in raw materials and logistics.

Other EV manufacturers are also responding to inflation by cutting back production. EVs use metals not just for the chassis but also for batteries, which are the most expensive part of the vehicles, and silicon chips. While Tesla's strategy of adopting iron-based LFP batteries mitigates this somewhat, the fact that most LFP patents are with China and are not set to expire until later this year remains a challenge, although the company plans to localize all key parts of its vehicles,

Gigafest in Texas

In its latest quarterly release, Tesla had indicated that it would not be launching a new vehicle this year. The announcement by EPA suggests a change of plans. While the company has been able to innovate out of the nickel shortage problem, the shortage of chips and constraints from the supply chain disruption of the semiconductor industry due to the pandemic and the Russian-Ukraine war will continue to be concerns.

Tesla's gigafactory in Austin, Texas, is scheduled to hold a Gigafest on April 7. As the new cars roll out next month, we will be better placed to gauge the time frame for the 4680 and with it lighter vehicles with greater range and performance, including the Cybertruck.

Correction—March 16, 2022: A previous version of this article incorrectly referred to the Model Y SUV as Tesla's first SUV.

Article Sources
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  2. InsideEVs. "New Tesla Model Y Version Emerges on EPA's List."

  3. Teslarati. "Tesla Counters Model 3 SR+ with LFP Packs in North America."

  4. Teslarati. "Elon Musk Talks Nickel Concerns and LFP Battery Strategy."

  5. Torquenews. "Tesla's LFP Batteries: An Important Development in Battery Technology."

  6. Reuters. "Tesla Hikes China US Prices for Model 3 and Model Y Cars."

  7. Reuters. "Musk Says Tesla, SpaceX Are Facing Signification Inflationary Pressure."

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