Tesla is moving things around at its Fremont plant in order to make way for the upcoming Model Y and a newly reported Model S refresh, according to CNBC. The new Model S, Tesla's flagship car, is said to have a longer-range battery and and a more "minimalist" interior design, according to current and former Tesla employees, who said the company is reportedly aiming for September for its Model S refresh.
The decision to re-arrange the Fremont plant and begin working on assembling two new vehicles comes at a precarious time for Tesla's cash balance. The automaker recently made another round of "hardcore" cost-saving cuts last week - including ditching toilet paper at some facilities - which begs the question of how capital intensive this new shift at Fremont could be.
Regardless, the company appears to be betting on its ability to redouble its efforts in the luxury segment with the Model S and capture more of the growing SUV segment with the Model Y. CEO Elon Musk had previously suggested the Model Y would be made at Fremont (why wouldn't it, it's essentially another Model 3), but no official announcement has been made.
According to Tesla insiders, Tesla will be required to combine the Model S and Model X production into one line to be able to produce the Model Y at the facility. The design of the Model X has been notoriously complex, and it requires a significant footprint on the factory floor to build. Tesla CEO Musk had said on Twitter recently that tours of the facility were being cancelled due to "upgrades".
Part of the factory is being upgraded, but tours will continue around the parts that aren’t— Elon Musk (@elonmusk) May 23, 2019
Insiders say that the Model S refresh will "likely include an interior with the minimalist look and feel of the newer Model 3, the same drive units and seats used in the higher-end Model 3 and a battery that delivers 400 miles of range on a full charge."
Additionally, after last week's barrage of sell side downgrades - which included Wedbush, Citigroup and Morgan Stanley, among others - Tesla caught another downgrade mid-week from Consumer Edge, who lowered their price target on the name from $310 to $225, according to Bloomberg.
Their note mentioned that the latest equity and convertible note issuance signals Tesla "is not yet a capital efficient manufacturer with a self-funding business model". Analyst Derek Glynn also noted a higher cost of capital for the company in the future and mentioned that potential acquirers and suitors for partnerships are few and far between. His most likely scenario is that Tesla "remains an independent company that explores partnerships with large social media platforms to quickly scale its autonomous ride-sharing network".