Tesla Model Y vs Tesla Model 3: Top Reasons the Compact SUV is a Better Investment for the Carmaker

Sep 08, 2016 05:54 AM EDT | Sovan Mandal

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Tesla might be busy firming up production plans to mass produce the Model 3 though analysts believe they would be better off bringing the Model Y to the market instead.

People Are Buying More SUVs than Sedans

According to the Business Insider, the number one reason cited in support for pushing ahead with the launch of Model Y is that people are buying more SUVs and crossovers than sedans. The report has statistics to support the above trend, with sales of passenger cars declining 12 percent in August while SUVs saw a 2 percent surge in sales during the same period.

However, with that being the general buying pattern, Tesla has just the Model X SUV to offer. True its bristling with high-end technology and has got the range, speed and looks to flaunt. Unfortunately, all of that comes at a price, which at over $100,000 makes it beyond the reach of the masses.

A Budget SUV will Allow Tesla to Dominate the Market

That said, the Model 3 can serve as an eye-opener for its makers. The one reason it has seen around 400,000 bookings in spite of it slated to go into production only towards the end of 2017 is its affordable price tag. Priced at $35,000 before taxes, the Model 3 does hit the price sweet spot bang on.

So the need of the hour is an SUV that would be affordably-priced even if that means sacrificing on some of the more exotic features of its bigger cousin. That includes such tricks like sensor-laden self-adjusting gull wing doors, and so on.

Instead, all that the masses would love to have is an electric SUV that has powerful range and speed, together with enough safety and comfort bits built into it.

The Model Y Will be Tesla's True SUV

Another reason Tesla would do good to speed up its Model Y plans is that competition is already heating up in the segment. Chevy has stated it intends to launch an SUV version of its Bolt towards the end of the year itself. Hyundai too is eyeing the SUV space keenly.

Meanwhile, Mercedes and Audi have also stated they will have pure electric models ready within the next one year or two. Among the other manufacturers rushing with the electric SUV plans include Volkswagen and Volvo.

However, Musk does not seem to be too perturbed with the competition around him and has proclaimed the Model Y will sell between 500,000 to a million units annually when it arrives, ValueWalk reported. Sure it has the brand power and a growing loyal user base, though it remains to be seen if more choices have any impact on his plans.

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