It's a relatively slow news day for Tesla (TSLA 1.45%), yet shares have jumped over $11, or 4.5%, as of this writing. While the Intel and Mobileye deal likely pushes up comparable valuations for any company involved in autonomous driving technology -- given the incredible premium that the chipmaker is paying for a company that was already very richly valued to begin with -- that deal was announced yesterday, so is unlikely to be driving today's gains.

Oops

It seems more probable that the market is reacting favorably to a MarketWatch article published earlier in the day that claimed, "Small SUV coming next year from Tesla," citing a report from Autocar. Unfortunately, MarketWatch appears to be mistaken.

MarketWatch, which has a much larger following than the smaller British automotive magazine, states: "The Model Y would be unveiled 'sometime next year,' the magazine said, with production slated for later in the year. It is likely to have the same top-hinged doors as the full-size Model X, it said." But Autocar never actually claims this, nor does it cite any sources that might be privy to the Model Y's unveiling.

Model X driving

Tesla's current SUV, the Model X. Image source: Tesla.

Instead, Autocar merely says, "The Model Y is unlikely to be unveiled until some time next year, with production set to follow late in the year." Saying the vehicle is "unlikely to be unveiled until some time next year" is not the same as "would be unveiled" next year or that it is "coming next year." There seems to be some inadvertent semantic confusion on MarketWatch's part, but that's not stopping shares from jumping on the prospect of Tesla's electric compact SUV; Autocar is mostly just reiterating all of the prevalent (and already known) Model Y rumors.

Sorry, investors. Nothing to see here.

Model Y will be important, but it's probably farther out

That being said, Tesla certainly is working on a compact SUV. CEO Elon Musk has casually discussed the Model Y on many occasions over the years, and then formally committed on paper to "a future compact SUV and a new kind of pickup truck" in his Master Plan, Part Deux blog post last July. The Model Y's potential is arguably even greater than the Model 3, given the secular shift away from sedans toward crossovers and compact SUVs that the market has been experiencing for many years and remains ongoing. That trend isn't going away anytime soon.

Here's a snapshot of last month's auto sales data.

Vehicle Category

February 2017 Unit Sales

Change (YOY)

Midsize cars

229,000

(15%)

Small cars

206,000

(10%)

Luxury cars

67,000

(8%)

Crossover

396,000

12%

Midsize SUV

80,000

(4%)

Large SUV

27,000

28%

Small SUV

19,000

11%

Luxury SUV

18,000

1%

Data source: Motor Intelligence via WSJ. Figures rounded.

Getting into the mainstream compact SUV market will be an important milestone eventually, but it's extremely unlikely that Tesla is anywhere near ready to unveil the Model Y, given how long automotive design, testing, and validation cycles are and the simple fact that Model 3 is the top priority right now. For reference, Model S and Model X launched three years apart. It would also be unwise to distract potential Model 3 customers that might rather wait for a Model Y, possibly resulting in lost sales.

Model Y is in the pipeline, but probably not so soon.