Please ensure Javascript is enabled for purposes of website accessibility

Tesla's New Model Y SUV Reportedly Plagued by Defects

By Rich Smith – Jun 16, 2020 at 5:10PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Q2 manufacturing quota gets thrown into doubt.

Model Y was supposed to be a success story for Tesla (TSLA 0.25%). It's turning into something of a headache, according to some reports.

Unveiled in March 2019, deliveries of Tesla's mass-market electric SUV began in mid-March 2020, six months ahead of schedule just before coronavirus hit and disrupted production. Tesla has since resumed production of the SUV, and CEO Elon Musk thinks the Model Y could eventually prove so popular it will outsell the company's Model 3 mass-market electric sedan. There's just one problem with that assumption, however: Some consumers who ordered Model Ys early are already handing them back.  

Tesla Model Y SUV.

Image source: Tesla.

As renewable-energy industry-watcher Electrek reports today, online discussion forums for Tesla customers are "flooded with new buyers reporting issues with their new Model Y, refusing deliveries, and in some cases, Tesla proactively canceling deliveries due to issues." Buyers are posting photos of vehicles that they've been delivered, highlighting manufacturing defects such as issues with paint and trim, indentations in the upholstery, loose parts -- and in at least one case, a backseat that wasn't bolted onto its base!

In response, some buyers are returning their cars within the initial 7-day return period despite some reports that buyers will be barred from buying another Model Y for a full year as a consequence, while others are simply refusing to take delivery at all . Tesla itself has interrupted other deliveries, informing buyers that the company had discovered defects and is delaying delivery while it gets them fixed.

What does it mean for the stock? Elon Musk's latest prediction for Q2 production is 83,177 vehicles -- Models S, 3, X, and Y combined. That number's already down from Q1, in which the company manufactured more than 102,000 vehicles. The more Model Ys that get returned, rejected, or preemptively recalled by the manufacturer, the worse this quarter could go for Tesla.  

Tesla reports earnings on July 22.  

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
$276.01 (0.25%) $0.68

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.